The CONFOTUR LAW and its benefits

When looking in Punta Cana at New Villas or condos there is a law that applies...the CONFOTUR Law No.158-01 which is "Promotion of Tourism". The law is aimed at projects in tourist real estate destinations in order to encourage tourism in the area. The law saves the buyer the 3% Transfer Tax (3% of value of property) and if spending over approx $148,000US it saves you the 1% property tax for period of 15 years, under $148,000US (approx) property is tax exempt.  My question is why don't I see this incentive listed in any new construction communitee listings when looking at the North Coast real estate?

Hi Kat,

Wow!!! Good to know. I will investigate further with my lawyer....

Each individual developer or construction company needs to apply for this tax exemption. The exemption only applies to the first buyer of the property. In several instances I’ve observed that even though the buyers who benefit from this law save in taxes these properties tend to be more expensive than those that do not have the tax exemption.

The law only applies to designated tourism zones, which seem to be :

1- Jarabacoa y Constanza
2- Barahona, Baoruco,Independencia y Pedernales
3- Montecristi, Dajabón, Santiago Rodríguez y Valverde
4- SanCristóbal y elmunicipio de Palenque; la provincia Peravia y la provincia Azua de  Compostela.
5- La provincia María Trinidad Sánchez y todos sus municipios
6- Polo Turístico de la provincia de Samaná
7- La provincia de Hato Mayor  y sus municipios ; la provincia de El Seybo y sus municipios ; la provincia de San Pedro de Macorís y susmunicipios ; la provincia Espaillat y los municipios : Gaspar Hernández , Higüerito , José Contreras , Villa Trina y Jamao al Norte ; Jamaoal Norte ; las provincias Sánchez Ramírez y Monseñor Nouel ; laprovincia MontePlata ; en la provincia de La Vega , el municipio de  Luperón , así como el Castillo y La Isabela Histórica, en la Provincia de Puerto Plata , y la Zona Colonial de Santo Domingo.
8- La Provincia de Santiago  y sus municipios.
9- El municipio de Las Lagunas de Nisibón , y las secciones de El Macao, Uvero Alto y Juanillo , de la Provincia de La Altagracia.  Modifiyed in 2002 with Ley No. 184-02 : other municipios of the Altagracia Province got other minor incentives

The idea is to promote investment in the regions that need it the most.
The North Coast tourist zone ( POP, Sosúa, Cabarete)  is not listed.

I think that might be the issue...the developers on North Coast are not applying for the exemption. But it was not my understanding that only the 1st buyer benefits from the exemption. The realtor Scott Medina from (large realty company on east coast) has it on just about all new construction listings and it doesn't say anything about being just the 1st buyer in fact most places have already had several sales. As far as the price, there were quite a few that I looked at there that I am finding on North Coast in same price range.

You would think with the Marriott hotels coming in with huge project by 2021Cabarete and Sousa would be considered a tourism spot, they are going to start advertising as luxury vacation spot is what I read.

CONFOTUR is applicable to Puerto Plata Province.

I was involved with one such large renovation hospitality project 18 months ago.

Obtaining CONFOTUR does take time and a lot of documentation up front including significant design documentation. This actually lengthens the whole process for developers who see this benefit important in their cost planning. It is hard to get any taxes paid back retropspectively, so CONFOTUR needs to be in place before any offshore materials are bought.

So how do you know if your development is getting this but does not say so.

2009 to end 2015 projects listed here.

There must be a list of approved projects since the end of 2015 but haven't found it online yet. You could always ring MITUR.

Cindyscruise.....I am not sure how to tell if the developer is not telling you, I don't think he would benefit from not telling because it promotes his new community. I don't know if a lawyer could dig deeper at closing to make sure 3% transfer fee gets waived if indeed it's supposed to. The 1% taxes over $148,000 purchase would not be a huge amount every year (compared to taxes in US) but $200-$400 per year  year for 15 years adds up! I will definitely be as long questions if I decide to purchase on my next visit of realtor, lawyer and developer:-)

There are several projects at the north coast with Confotur. In Las Terrenas. 100% sure.

The thing is, 15 years taxfree but ONLY for the first buyer. So when you want to sell the property after 1 year or 5 years, the new owner needs to pay the normal taxes.
The properties in confotur are always accessed at the full price so the new owner will pay full taxes.
So when you want to sell a property like that, often very difficult because everybody prefers to have a taxfree unit.

Probably better to buy without confotur.

Ok you mean the first person to buy the property, I thought the post from some one the other day meant the first person to buy one of the villas or condos. So that makes sense that you cannot pass it on when you sell. I don't think any of the places on the North Coast I want to look at offer it....but taxes are nothing compared to US so that's ok.

First purchaser of any unit honey.

We were told that developers or builders could only apply per property every 5 years.  Even though there is expansion planned for our community in Las Terrenas, it most likely will not take place for 5 years until they can apply for it again.  Perhaps this is the case where you are looking?  But I am not an expert by any means, just passing along what was explained to us by the project manager of our property.

Hi Kat, I believe the developer has to apply and then the tax exemption is only available for a certain period of time for the entire development, but they can also pass that on to whomever they sell the lots or units as long as these units were not sold to anyone else once completed in the project. That was the case when we bought our condo during construction at Residencias Costa Hermosa in the El Cortecito area of Punta Cana.
Because we ultimately do not want to live in a condo, we started looking for villas that we could afford and Sosua offered more of those at better values than we saw in Punta Cana either at PC Village, Cocotal, El Ejecutivo (too remote, not as many expats), or the new places near downtown PC (too small and too close together). So we just bought a lot in Sosua Ocean Village and will have the opportunity until 2024 to take title to the lot and not pay the transfer tax. The developer also mentioned that they may get an extension, but we are not counting on that.

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