The new law taxes real estate capital gains at a fixed rate, but it doesn't define the threshold at which it applies. Until the Executive Branch issues the regulations, every transaction in the secondary market carries an unanswered tax variable
SANTO DOMINGO – Law 30-26 created a new tax, clear in its rate but opaque in its base. Article 14 of that law, enacted on June 18, 2026, establishes that capital gains generated from the sale of real estate owned by individuals are subject to a 10% tax, as a single and final payment.
The rate is written down. What isn't written down is the answer to the question every property seller needs before signing: 10% on what?
That question still has no official answer. And until it does, the secondary real estate market operates with an unresolved tax variable that directly impacts the price negotiation of each transaction.
| Concept | What the law defines / what it does not |
|---|---|
| Rate | 10% on capital gains (Art. 14, Law 30-26) |
| Character | One-time and final payment |
| Settlement period | Six months from the date the transfer is completed |
| Taxable base | Not defined in the legal text — pending regulation |
| Inflation adjustment | It does not mention whether it applies or whether it refers to Article 289 of the Tax Code |
| Inherited property | Acquisition cost not specified |
| Deductible improvements | Not determined |
| Regulation | Not released as of the date of this report |
What did the tax code say before?
To understand the magnitude of the gap, it is helpful to start with what the Dominican tax system had before. Article 289 of Title II of the Tax Code, published in the legislative library of the General Directorate of Internal Taxes, precisely defines how capital gains subject to tax are determined under the general regime: the acquisition or production cost, adjusted for inflation, will be deducted from the price or value of the respective asset, in accordance with the provisions of Article 327 of this Title, and its Regulations.
In other words, profit is not the selling price. It is the difference between what the seller receives today and what they originally paid for the item, adjusted for accumulated inflation.
If a person bought an apartment in 2010 for RD$3,000,000 and sells it today for RD$9,000,000, the taxable profit is not RD$9,000,000 or RD$6,000,000: it is the difference between the sale price and the original cost adjusted for inflation over the past 15 years, which would significantly reduce the taxable base.
This inflation adjustment mechanism has a precise technical purpose. When economists talk about taxing real profits as opposed to nominal profits, this is exactly what they mean: without inflation adjustment, the government would be taxing a portion of the increase in value that does not represent new wealth, but simply the effect of time on the purchasing power of money.
The Central Bank of the Dominican Republic, in its working document Construction of a housing price index for the Dominican Republic, prepared by Johán Félix Rosa, of the Department of Monetary Programming and Economic Studies in August 2021, documents precisely that monitoring the value of real estate assets is relevant for economic policy because their fluctuations mix real and nominal components that must be separated for a correct measurement.
What Article 296-1 says, and does not say
The new article 296-1, introduced by article 14 of Law 30-26, establishes that capital gains generated in the alienation of real estate by individuals will be subject to 10% as a single and final payment.
The article sets the settlement period, six months from the completion of the transfer, and establishes the applicable exemptions: main residence reinvested in a new main residence within the same period, people over 65 years of age who transfer their main residence, and legal entities whose activity is exclusively the ownership of real estate not intended for commercial activities.
What Article 296-1 fails to do is define the taxable base. It doesn't specify whether the profit is calculated as the sale price less the acquisition cost adjusted for inflation, which is the formula in Article 289 of the Tax Code for the general regime. It doesn't specify whether the cadastral value is used as a reference. It doesn't establish what document proves the original acquisition cost when the property was purchased decades ago, when the records were different, or when the deed reflects a value very different from the actual price paid—a practice that has historically been common in the Dominican market.
Article 296-1 also does not explicitly refer to Article 289 for calculating the tax base. This lack of reference is technically significant: the new 10% regime is introduced as a single and final payment, distinct from the general income tax regime, and does not incorporate by reference the profit determination rules of the previous regime.
Three scenarios to process
The first case involves a property acquired many years ago with a deed at its cadastral value. If the DGII (General Directorate of Internal Revenue) uses the value in the deed as the acquisition cost, which may be significantly lower than the actual price paid, the taxable base would be artificially inflated, generating a tax on a gain that, in practice, did not exist to that extent.
The second case concerns inherited property. When an individual inherits property and then sells it, what is the acquisition cost? Is it the value declared in the probate proceedings? The cadastral value at the time of the deceased's death? The price the deceased originally paid? Law 30-26 does not specify this, and the new Article 296-1 does not incorporate any mechanism to resolve this situation.
The third scenario is the most common in the current market: the buyer who purchased a property in pre-sale, paying installments during construction, and is now selling the completed property. In this case, the acquisition cost is the sum of the installments paid plus the original closing costs. The legal text does not define how to prove this cost to the DGII (General Directorate of Internal Revenue) and whether deductions for improvements made to the property are allowed.
The effect on price negotiation
Uncertainty about the tax base has an immediate and measurable consequence on the secondary market: the uncertain tax burden is passed on to price negotiation.
If the seller doesn't know how much tax they will pay, they tend to factor that risk into the asking price. If the buyer also doesn't know how much they will have to pay in the transaction, the uncertainty becomes a risk premium that can make the deal more expensive for both parties.
The Organisation for Economic Co-operation and Development warns, in its working paper Taxing capital gains: Country experiences and challenges (Diana Hourani and Sarah Perret, OECD Taxation Working Paper No. 72, February 2025), that capital gains taxation systems that do not adequately resolve the determination of the tax base tend to undermine fairness, introduce economic distortions and limit revenue potential.
The same document identifies that one of the technically strongest arguments for careful treatment of these gains is precisely the need to separate the inflationary component from the real increase in value, the same distinction that Article 289 of the Dominican Tax Code incorporated into the general regime and that the new Article 296-1 neither replicates nor explicitly rejects.
What the law does clearly define
Not everything is ambiguous. Article 296-1 is precise in three points that should be noted by stakeholders in the sector.
- The deadline: the tax must be settled within six months of the completion of the transfer, which in practical terms means six months from the date of the notarial act or registration with the Real Estate Jurisdiction, as applicable.
- Exemptions: The gain is exempt when the total amount obtained from the sale of the main residence is reinvested in the purchase of a new main residence within the same six months. The exemption is proportional when the reinvestment is partial. And it is total, without any reinvestment condition, when the seller is an individual over 65 years of age who transfers their main residence.
- The definitive nature: the 10% is a single and definitive payment, which means that this income is not incorporated into the progressive scale of the seller's ISR nor does it generate additional obligations for this concept.
Questions for the regulations
The Executive Branch has the responsibility to issue the regulations for the application of Law 30-26, which must specify, among other points: how the taxable base of real estate capital gains is determined, what documents prove the acquisition cost, whether the inflation adjustment provided for in article 289 of the Tax Code applies to the new 10% regime, how inherited property is treated, and whether deductions for documented improvements are allowed.
Until such regulations exist, every transaction in the secondary real estate market carries a tax risk note that sellers, buyers, agents, and financiers must explicitly incorporate into their analysis. Ignoring it doesn't eliminate the risk; it simply turns it into a hidden cost that someone—the seller, the buyer, or both—will ultimately absorb.
Sources consulted:
- Law No. 30-26 on measures for economic growth, tax simplification and mitigation of the international crisis, Art. 14 (new Art. 296-1 of the Tax Code), promulgated on June 18, 2026.
- Dominican Republic Tax Code, Title II, Art. 289 — Capital Gains. General Directorate of Internal Taxes. dgii.gov.do
- Central Bank of the Dominican Republic. “Construction of a Housing Price Index for the Dominican Republic.” Johán Félix Rosa, Department of Monetary Programming and Economic Studies. Working Paper, August 2021. cdn.bancentral.gov.do
- Hourani, D. and Perret, S. (2025). «Taxing capital gains: Country experiences and challenges». OECD Taxation Working Papers, No. 72. OECD Publishing, Paris. https://doi.org/10.1787/9e33bd2b-en
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