I just read an article online regarding retiring in the DR and wanted the feedback of people that live in the DR and have income investments (stocks, bonds, CD's etc) and/or also own a home or condo. I will first write what I believed to be true then I will paste a portion of the article I read.
WHAT I THOUGHT:
I thought there was no PROPERTY tax on homes less than US$150,000 and if it is over that amount you get charged 1% on anything above the US$150,000? The article states 1% annually is charged on properties exceeding RD 5million (that's only a little more than US 100,000 right?)
As for INCOME tax I know DR does not tax your Social Security and Pension but wasn't aware they tax investment income as much as they do, (maybe think I was thinking income from employment got taxed which I won't be working there when we move). The ARTICLE states anything over RD$290,000 would be taxed at 15% (which is only income of US$5,000 annually).
I just want to confirm this is the way it works, it is still cheaper to live in DR I just may not invest as much. Anyway below is a portion of the article I read.
ARTICLE: LIVE & INVEST OVERSEAS
"Anyone that is a Resident (lives there 182 days or more per yr) and has lived in DR for at least 3 years is subject to Dominican taxes. All taxpayers must register with the tax authorities and obtain a tax or RNC (Registro Nacional de Contribuyentes) number.
Tax rates on income from financial investments abroad is levied on a sliding scale, with the first RD$290,000 exempt. Income between RD$290,000 and RD$435,000 is taxed at 15%; income between RD$435,000 and RD$604,000 at 20%. Everything above $604,000 is taxed at 25%. The scale is adjusted for inflation annually in January. There are very few deductions.
A 1% annual tax is assessed on any real property owned by individuals, based on the value of the property as appraised by the government authorities. The 1% is calculated only for values exceeding RD$5 million."
Income & Property Tax
My first thought is that the exchange rate changes. Depending on when articles were written, the US dollar equivalent would change. I assume the RD amount is adjusted for inflation periodically, but the exchange rate to US dollars has gone from about 40 to 50 over the past 5 years.
Exactly correct, as the exchange rate changes so does the amount exempt.
While these laws may be on the books i know of no expat who pays tax on investment income. None.
If in fact they do, then you need to research the tax treaty for your country. Often you get any tax paid back in credits in your country. Do your homework.
If you set up a Dominicab corporation here you will pay some tax. I don't know the limits of corpoate earnings, I just know that I paid a yearly fee of $175 US for the corp. It was for protection of assets, however, did not do any business or make an income of any kind. Similar to a sub chapter-S corporation in the states. Other than that, like Planner, never heard of an expat tax. In fact never heard of anyone paying that high a rate on property.
Thanks to all...
Yes I was always under the impression you didn't get taxed on income at least that's what our realtor told us a few years back (and she has lived there 20+ years) along with not being taxed on Social Security and pension. So when I read this article I was a little confused, I just wanted to know because I may just want to put some of our retirement savings into a CD or a dividend etc just to make some extra income monthly to live on....so good to know I won't be taxed on it. Thank you!!😄
Tinker - no no no honey. A corp for passive income is a very bad idea. We use corps to hold real estate and to actually do business. I know of no one who has a corp for passive investment income.
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