Am I Buying My Dominican Property the Wrong Way???

I was talking to my attorney about my upcoming purchase of a condo in Cortecito.

Here are the details:

• Purchase price $170,000

• 1 Bedroom suite

• 800 square feet

• Maple Suites from Boardwalk Properties

We decided to set up a Dominican LLC (called an SRL) to acquire and hold the property.

After our discussion, I’m wondering if that’s a mistake!

Let’s see what you think…

This particular property does not have CONFOTUR which would waive property tax for 15 years.

The reason?

Taxes only apply above about $180,000 USD. Property taxes in Dominican Republic are 1% of the amount over $180,000.

So if you have a property worth $280,000 - then you’d pay 1% of $100,000 - or $1000 annually

Because this property is $170,000 - there are no property taxes!

BUT!!!!!!

My attorney let me know that when you acquire INSIDE of an SRL, you need to pay an ‘asset tax’ annually on the value of the assets inside the SRL.

And conveniently - the asset tax is 1%!

So CONFOTUR or not, my $170,000 purchase which has no property tax WILL require me to pay $1700 annually in the form of an ‘asset tax’.

He did explain that if the income tax I pay is higher than the asset tax, that the asset tax will be waived.

In other words, if I produce enough income to pay the Dominican government $1701 in income taxes, I’m square .. no need to pay the $1700 asset tax.

The reason we wanted to set up the SRL is for personal liability protection.

That is important, but it’s also important for me NOT to pay taxes!

I am therefore conflicted .. is it worth the protection in exchange for the asset tax or do I just acquire in my name and forget the taxes.

A few other points to consider:

• My understanding is if income tax is less than the asset tax, I pay both

• This income DOES need to be reported on my US tax return

• I can also apply the foreign income tax credit provided I meet all of the provisions to avoid US taxes altogether

• SRL’s require two members - my wife and I will be the owners

• Talk to your attorney about the impact of being a Dominican citizen and holding a cedula, if any

For me, I believe personal liabiltiy protection is worth paying the asset tax and/or income tax on the property.

The SRL also allows me to take income from realtors I refer to people and leverage writeoffs for the business of me being a brand.

It makes sense for me to have the entity with my wife, and for us to leverage the entity as we begin to build a portfolio and business relationships in the Dominican Republic.

That said, I wanted to make sure YOU were aware of this asset tax as you consider how you acquire your property.

I have 3 final points to make:

1. PLEASE consult with your own attorney, advisor, accountant - I’m just a dude sharing what he learns!

2. If you’d like a referral to my attorney - use this link to complete a form and his team will reach out. I’ve liked working with him so far.

3. For a GREAT realtor to work with, use this form and they will reach out to you to set up an initial call .. and if interested in Maple Suites, just put MAPLE SUITES in the additional comments field

All outreach will be through WhatsApp and be aware that if you opt to do business with anyone I refer, they will pay me a referral fee (just to be fully transparent)

What say you?

The SRL worth it?

No bueno?

What would YOU do in my situation?

Oh! If you’d just prefer to see me rate Dominican food I found in Detroit than hear me whine about SRL’s .. check out today’s video below 😉