SANTO DOMINGO.– Among the measures announced yesterday, Thursday, by the Minister of Finance and Economy, Magín Díaz, within the package of actions to mitigate the impact of the international crisis, is a proposal that, if approved by Congress, would have direct effects on real estate owners and investors: the reduction from 25% to 10% of the tax applicable to capital gains obtained by individuals from the sale of real estate.
The set of measures announced with the aim of boosting the economy in the face of the international crisis will be presented next week in the National Congress.
What is capital gain?
According to the General Directorate of Internal Taxes (DGII), the capital gains tax is levied on the transfer or conveyance of assets or rights located, placed or used in the Dominican Republic when a property passes to a third party.
The entity explains that this tax must be paid by individuals or legal entities that transfer or dispose of capital assets subject to this tax.
Capital assets can include land, real estate, financial assets, and intangible assets, among others.
The following are not considered capital assets: accounts or notes receivable, inventories acquired for the purpose of sales to customers, and depreciable or depletable assets.
How is it calculated?
According to the DGII (General Directorate of Internal Revenue), to determine capital gains, the tax basis of the asset is deducted from the sale price. This must be reported on the annual Income Tax return.
According to the DGII table, it applies as follows:
National individuals: 25%
• Foreign individuals: 27%
• National legal entities: 27%
• Foreign legal entities: 27%
What does the government propose to change?
The proposal presented by the Ministry of Finance and Economy proposes to reduce from 25% to 10% the rate applicable to capital gains derived from the sale of real estate when the operation is carried out by individuals.
If the measure is approved, those who obtain economic benefits from the sale of a property would have a lower tax burden on the profit generated in the transaction.
Part of the economic measures package
The initiative is part of a series of actions announced by the Government to address the economic pressures stemming from rising international oil prices and the uncertainty caused by the conflict in the Middle East.
During the presentation of the package, Minister Magín Díaz explained that the measures seek to mitigate the impact of the international crisis on the Dominican economy, while also striving to maintain favorable conditions for investment and economic growth.
Recommended readings:
- DGII establishes new limit for cash payments in the purchase, sale or transfer of real estate
- This is the package of measures announced this Thursday by the Government to mitigate the international crisis
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