Understanding CONFOTUR: How Foreign Buyers Save Thousands in Taxes

Law 158-01, administered by CONFOTUR (Comité de Fomento Turístico), is the Dominican Republic's most powerful incentive for tourism property investment. Passed in 2001 and amended several times since, it grants qualifying buyers a 15-to-20-year exemption on several of the most significant property-related taxes. For a $500,000 purchase, the savings over the exemption period can exceed $150,000 USD — more than the cost of a second property in some zones.

What is CONFOTUR and how did it come about?

The law was originally designed to attract hotel and resort development by offering tax holidays to developers willing to build tourism infrastructure in underdeveloped coastal areas. Over time, as the secondary market for individual condos and villas grew, the exemption expanded to cover individual unit buyers within qualifying projects. Today it is the primary tax planning tool for foreign real estate buyers in the DR.

What does the exemption cover?

• Transfer tax (3% of purchase price): fully waived — on a $500k property this is a $15,000 immediate saving
• IPI (annual property tax at 1% of assessed value): fully waived for the exemption period
• Income tax on rental revenue (normally 27%): fully waived — critical for investment properties
• Import duties on furniture, fixtures and equipment for the property: fully waived
• Taxes on mortgage interest: fully waived

What qualifies?

To qualify for CONFOTUR benefits, the project must hold a valid certification from the Ministry of Tourism (MITUR) registered prior to the sale of individual units. The property must be located within a designated tourism zone, and the construction must be new or substantially renovated. Re-sale properties can transfer the remaining exemption period to the new buyer, so a property with 12 years of exemption remaining is worth significantly more than an identical property without it.

How to verify before you buy

The most important step: ask the developer for the Certificado CONFOTUR and cross-reference the project number with the MITUR registry. Do not accept a developer's word alone — CONFOTUR misrepresentation is one of the most common forms of real estate fraud in the DR. Our attorneys verify directly with MITUR before any purchase.

CONFOTUR and corporate ownership

If you purchase through a Dominican SRL or SA (corporate entity), the CONFOTUR exemption still applies, but you lose the individual IPI exemption threshold that applies to personally held property. For most buyers, individual ownership is more tax-efficient unless there are specific liability or estate planning reasons to use a corporate structure.

What happens when the exemption expires?

At the end of the exemption period, IPI kicks in at the standard 1% of assessed value. The transfer tax would apply on any future sale. Income from short-term rentals becomes taxable at the standard 27% corporate or personal income tax rate. Forward-thinking buyers plan for this transition: some refinance or sell before expiry, others factor the post-exemption tax burden into their long-term hold calculus. Our team can model both scenarios before you commit.