Do I need a tourist license for vacation rentals in Dominican Republic?

One of the concerns that an investor in the Dominican Republic may have is the legal aspects related to vacation rentals. Do I have to pay taxes on the rent of a property I have purchased? Do I need to apply for an tourist license for vacation rentals and thus operate legally?

In fact, rent a property in Dominican Republic for short-term periods is very simple, and can be done legally if you take into account the following guidelines.

At Vivantia Homes we want to clarify all these points so that you know everything you need to know regarding the apartment rentals in Dominican Republic for tourists.

What is vacation rental?

The first thing you should be clear about is that vacation rentals consist of renting an apartment on a short-term basis, for periods of less than 3 months, which leaves you outside of the guidelines set out by the tenant law in the Dominican Republic.

We are therefore talking about short-term rentals, These are generally intended for tourists who are going to spend a short period of time in the country.

This type of rental is much more lucrative, because the price per night can vary over time, so although your apartment will not always be occupied, you will be able to get a higher return month by month.

Is it legal to rent a tourist apartment in the Dominican Republic?

If you buy a tourist apartment in Dominican Republic, you can rent it legally, even if you are a foreign investor. There are no regulations that prevent you from obtaining a commercial return on rentals, so unlike other countries where there are severe restrictions for foreign investors, buying and renting an apartment in the Dominican Republic is perfectly legal and highly profitable.

However, you should be aware that there are some legal obligations when renting an apartment you must take into account to be able to perform these operations correctly.

Is it necessary to apply for a tourist license in the Dominican Republic to rent?

This is where many may have doubts. The truth is that to rent an apartment on a sporadic basis no specific tourist license is required.

However, when the property is promoted on a regular basis as a tourist accommodation or as a if two or more properties are managed with services similar to those offered by a hotel, sometimes certain requirements may have to be met.

Think that if you offer services such as breakfast, luggage storage or cleaning and security services, In this case, it can already be seen as a business, so in this case a tourist license would be required.

In this case, you would have to register with the Dirección General de Impuestos Internos (DGII), whether you are a company or you bought your apartment as an individual. In this case, you will have to declare your income and comply with your tax obligations, i.e. the payment of internal taxes.

The easiest way to rent tourist apartments is buying an apartment that is already integrated in a condominium, The regulations of which do not impose any impediment and are especially designed for those who wish to invest and rent their home on a short term basis to tourists.

What taxes do I have to pay as a foreign investor if I rent an apartment I bought?

Some people may be concerned about the taxes in Dominican Republic The tax payable on the income obtained from the rental of apartments.

What is certain is that there are advantages for investors who buy and rent apartments subject to the Confotur Law, which is why they can be exempted from IPI and real estate transfer for 15 years, as well as on income tax.

On the other hand, hosting providers must collect ITBIS on the services rendered, although it should be noted that it is the people who rent your property who pay this tax.

Buys and rents apartments and delegates property management to a hotel brand

One of the most interesting alternatives for investors seeking to maximize profitability and, at the same time, reduce the operational burden of their apartments for rent, is to delegate the property management in a hotel brand.

By delegating the property management of your rental apartments, You will only have to worry about receiving your income from short-term rentals, and not having to do the actual work involved in becoming a tourist accommodation service provider.

In addition, the fact that buying a property in a condominium from a developer, The legal advantages of the Dominican Republic, instead of buying a lodging, make the process of regularizing your tourist rental business in the Dominican Republic easier.

Are you an investor looking for properties for rent in Dominican Republic? From Vivantia Homes we encourage you to solve all your doubts. already booking a call

How to identify profitable properties in Dominican Republic?

Thinking about buy a property in the Caribbean? Not all properties are profitable, or as profitable as an investor would like. Sometimes, they may have hidden costs, such as the need for renovations, charges and mortgages, or they are simply not a good investment because of their location, poor access or the distance to the most popular tourist attractions.

Therefore, if you want to invest in Dominican Republic, it is of great importance that you learn to identify the properties that can provide you with a high level of profitability.

What are profitable properties?

When we talk about properties that offer profitability, In other words, we are talking about the net yields that will be provided as a result of the transaction, after deducting all taxes, administrative charges and maintenance costs until you sell the property.

A property may seem profitable if we consider only the sale price in relation to the purchase cost. However, to analyze whether the investment has really been beneficial, you should consider all the charges and taxes involved in the maintenance of the dwelling, You can also see any renovations you may have carried out, from replacing furniture to decoration works.

In the event that you have rented the property, the rental income is added to the income generated by the property. However, you should not forget to also add the costs associated with the process of rent a property, such as any commissions you may have paid to applications, platforms or intermediaries for the management of the property.

How to find profitable properties in Dominican Republic? 5 basic tips

If you want to buy profitable properties in Dominican Republic, If you are not sure of your profitability, here are some key tips to keep in mind when analyzing your profitability.

1. Avoid properties with encumbrances and mortgages

They can be much longer and more complex to monetize, since they carry an associated cost or may involve legal disputes that would lead you to spend a lot of capital on lawyers, besides the fact that you would have no guarantee of recovering the investment made.

What in some places may appear to be a great real estate opportunity, In reality, it can be a lousy investment, even if the initial cost of acquiring the property may seem low.

2. Opt for turnkey properties in condominiums.

Ready-to-use or ready-to-rent properties are the best option for those who wish to obtain profitability from day one.

A property that does not need to be refurbished, that has all the advantages and comforts, and that is located in an excellent location. condominium surrounded by the best amenities, It is simply a space that you can start using as a business from the very first moment.

3. Choose properties in tourist areas of Punta Cana

If you need buy a house in Dominican Republic, It is best to opt for tourist locations such as Punta Cana, since you will have a very high probability of renting it frequently (short or long term) and also because it will be much easier to sell it than if it is a property in less frequented areas, which may take longer to sell or generate more doubts.

It also considers that some properties in tourist areas benefit from the Confotur Law, This is a tax exemption, by which you may be exempt from some taxes for some time, which would allow you to obtain a higher profitability.

4. Purchase real estate directly from the developer

Buying property from a developer or promoter means greater opportunities to obtain a high return than if it is a second-hand property, the price of which has been increasing over the years.

Opt for well-located properties, in places close to the beach, such as Cap Cana or Bávaro, The price of real estate that has been on the market for years and has been changing hands may have high prices, or may require certain renovations.

5. Analyze the profitability of renting before buying

Before acquiring a property, it is essential to study how much it can actually generate in rent. Research the average price per night or per month in the area, The annual occupancy and associated expenses such as maintenance, condominium management, cleaning, taxes and rental platform commissions.

Many investors focus only on the purchase price, but the key is in calculating the net yield, i.e. what is left over after all expenses. Comparing several similar properties on vacation rental platforms or consulting with real estate specialists can give you a realistic idea of demand and potential income.

At Vivantia Homes we have extensive experience in the Dominican real estate market and we can show you Punta Cana real estate opportunities, Would you like to know more? Write us now.