CONFOTUR explained: what the tax exemption means for a buyer
Almost every new development on the coast advertises CONFOTUR. It is a real and valuable benefit, and also one of the most loosely described. This is what it actually gives you, who gets it, and what to ask before you count on it.
By Cayo · · 2 min read
What it is
CONFOTUR is the Consejo de Fomento Turístico, the government council that approves projects under the tourism incentive law (Law 158-01 and its amendments). A development that obtains a CONFOTUR resolution is classified as a tourism project, and the units in it carry tax exemptions meant to attract investment to tourist zones. The north coast is one of those zones, which is why the label is everywhere here.
What the buyer actually saves
Two things matter to an individual buyer.
The first is the transfer tax. Normally the buyer pays 3% of the property's value to the tax authority (the DGII) when the title is transferred. On the first sale of a unit in a CONFOTUR project, from the developer to the first owner, that 3% is not charged. On a purchase of 250,000 dollars that is 7,500 dollars kept.
The second is the annual property tax, the IPI, which is 1% of the appraised value above an exemption threshold the DGII sets each year. A CONFOTUR property is exempt from IPI for a period that runs from the approval, currently up to fifteen years. For a villa or a large condo that would otherwise pay IPI, this adds up over the years to far more than the transfer tax.
Who gets it, and who does not
The transfer tax exemption belongs to the first purchase from the developer. If you buy a CONFOTUR unit second-hand, you pay the 3% like any other buyer. The IPI exemption attaches to the property for the approved period, so a resale buyer may still enjoy the years that remain, but your attorney should confirm this against the project's resolution rather than take the listing's word for it.
The exemption also depends on the developer having completed the approval, not just applied for it. "CONFOTUR in process" means nothing is guaranteed yet.
What to ask for
- The resolution number and date, and a copy of the resolution itself.
- The project name on the resolution, matching the project you are buying in, including the phase.
- The period of the IPI exemption and when it started.
- Whether the developer, not you, files the paperwork that applies the exemption at closing, and who pays if it is refused.
Our view
CONFOTUR is a good reason to prefer one project over a comparable one. It is not a reason to buy a project you would not otherwise choose, and it is not a discount: the saving is real, but a 3% exemption does not fix a 10% overprice. Compare the price per square metre with the resale market nearby first, then count the exemption as what it is, a bonus.
