Rental Income
Taxes in the
DOMINICAN REPUBLIC

The most common misconception among foreign investors is that CONFOTUR-certified properties are exempt from rental income tax. This is incorrect. CONFOTUR Law 158-01 provides exemptions for three specific taxes: transfer tax (3%), annual property tax (IPI at 1%), and capital gains tax (27%) on sale. Rental income tax under the Impuesto Sobre la Renta (ISR) is a completely separate tax obligation that applies equally to CONFOTUR and non-CONFOTUR properties. All rental income generated in the Dominican Republic is taxable regardless of the property's CONFOTUR status. Do not factor rental income tax exemption into your CONFOTUR property investment analysis.

The Dominican Republic uses a territorial tax system for residents: only income sourced within the Dominican Republic is subject to Dominican income tax. For non-residents, only Dominican-source income is taxable in the DR. This means: rental income from your DR property IS taxable in the DR; rental income from properties you own outside the DR is NOT taxable in the DR; your salary, pensions, and investment income from outside the DR are NOT taxable in the DR. However, you may also owe taxes on your DR rental income in your home country, subject to any applicable double taxation treaties and foreign tax credits.

The Dominican Republic has double taxation treaties (Convenios para Evitar la Doble Imposicion) with several countries including Spain and Canada. If your country has a treaty with the DR, you may benefit from reduced withholding rates on rental income and the ability to credit Dominican taxes paid against your home country tax liability. The US does not have a comprehensive income tax treaty with the Dominican Republic, though US taxpayers can claim a Foreign Tax Credit on their US return for Dominican taxes paid. Consult a cross-border tax advisor to optimize your tax position across both jurisdictions and avoid double taxation on rental income.

Airbnb, Booking.com, VRBO, and other short-term rental platforms are required to comply with Dominican Republic tax regulations when facilitating rentals in the country. The DGII has been increasingly focused on platform-facilitated rentals and has signaled intent to require platforms to report host income and collect taxes at source. Currently, most platforms do not withhold Dominican taxes, placing the compliance obligation on the property owner or their management company. This regulatory landscape is evolving, and investors should stay informed about new compliance requirements through their Dominican accountant.

The most effective legal strategies to minimize rental income tax liability include: maximizing deductible expenses (ensure all legitimate costs are documented with proper comprobantes fiscales), accelerating depreciation on furnishings and improvements (3-5 year depreciation on $10,000-50,000 of furnishings provides $2,000-16,667 annual deductions), timing major repairs and replacements to years with highest income, and structuring ownership through a Dominican SRL if you have multiple properties to access corporate deduction options. The difference between a well-optimized tax structure and an unmanaged one can be 5-10 percentage points on effective tax rate.

Non-compliance with Dominican Republic rental income tax obligations carries escalating consequences. The DGII can assess: unpaid taxes with retroactive liability for up to 5 years, a 10% surcharge (recargo) on unpaid tax amounts, monthly interest penalties (indemnizacion moratoria) at 1.10-1.73% per month, and additional fines for failure to file returns (up to 30% of the tax owed). In severe cases, the DGII can place liens on the property title. The DGII has modernized its information systems and cross-references property ownership records, bank transaction data, and platform income reports. Voluntary compliance is always preferable to DGII enforcement action.