The Law 189-11 is the statute that made modern affordable housing possible in the Dominican Republic. For a buyer it can mean an immediate saving of several hundred thousand pesos. For an investor it defines a high-volume, creditworthy, state-supported market. This guide explains how the mechanism actually works, using the official 2026 figures.
Enacted on 16 July 2011, Law No. 189-11 for the Development of the Mortgage Market and the Trust in the Dominican Republic pursues two connected goals.
The first is financial: to create the legal instruments that make long-term housing finance possible — mortgage securitisation, credit instruments, and above all the fideicomiso (the trust), which did not exist in Dominican law before this statute.
The second is social: to make a first home reachable for low and middle income households, by removing part of the tax burden that normally weighs on a property transaction.
It is this second dimension that created the legal category of vivienda de bajo costo — low-cost housing — and the set of exemptions attached to it.
A home only qualifies as "bajo costo" if its price stays at or below a ceiling set each year by the Directorate General of Internal Taxes (DGII) and adjusted for inflation.
Low-cost housing ceiling: RD$5,450,851.12
Set by DGII Resolution DDG-AR1-2026-00001.
Up RD$257,195.65 from 2025 (RD$5,193,655.47).
Three points matter, because they are routinely misunderstood:
The bajo costo regime touches three separate taxes. It is worth separating them, because they do not benefit the same people at the same moment.
Normally, registering a property in the buyer's name costs 3% of its value. For a first-time buyer purchasing a vivienda de bajo costo through a fideicomiso, that tax is exempt up to the annual ceiling.
On a home priced at RD$5,400,000 that is a direct saving of roughly RD$162,000 at signing — money that stays with the buyer on transaction day.
The law exempts from ITBIS the interest on mortgage loans for a first home, and provides ITBIS relief for developers and builders of low-cost housing projects. This relief acts on construction cost, and therefore on the final price offered to the buyer.
IPI is an annual 1% tax on an individual's real estate holdings, applied only to the portion above an exempt threshold.
Exempt threshold for individuals: RD$10,695,494.
Above it, the rate is 1% per year on the excess only.
A practical consequence that is very often missed: a bajo costo home at RD$5.4 million sits naturally well below the IPI threshold. For a household whose only asset it is, IPI is therefore nil — not because of a special exemption, but simply because the holding stays under the general threshold.
This is the part most guides skim over, even though it is where most of the buyer's protection actually sits.
The fideicomiso is a trust: the developer transfers the project into an autonomous patrimony, legally separate from its own balance sheet and administered by a licensed trust company. That patrimony holds buyer instalments, construction credit, the developer's own contributions and, where applicable, public compensation funds.
The consequence is decisive: if the developer goes bankrupt, buyers' money cannot be seized by its creditors. It is ring-fenced in a separate patrimony dedicated exclusively to completing the project. This is precisely what Law 189-11 made possible under Dominican law.
Note that the transfer-tax exemption for a first home is conditional on going through a low-cost housing trust. No trust, no exemption.
The conditions bear on the buyer as much as on the property:
The public MIVIVIENDA programme, built on this framework, adds subsidy and support mechanisms for families buying their first home.
This is the most widespread misreading, and it deserves a direct answer. "Bajo costo" is a tax category defined by a price, not a construction standard.
A bajo costo project is subject to the same building codes, the same structural inspections and the same environmental requirements as any other Dominican residential development. What makes the price possible is not lower quality: it is land cost, production scale, standardised layouts and, precisely, the tax relief the law provides.
The Najayo Arriba project in San Cristóbal shows the scale this framework allows: 1,785 homes developed under the Bajo Costo regime, with ITBIS and IPI exemptions within the ceiling, backed by the MIVED / Banreservas ecosystem.
That volume would make no economic sense without Law 189-11: it is the combination of trust-based security and tax relief that makes demand of this size creditworthy.
→ Explore Najayo Arriba and join the waitlist
Fifteen years on, it is easy to underestimate how thoroughly this statute restructured Dominican real estate. Before 2011, an off-plan buyer had almost no protection: instalments went into the developer's own account, and if the developer failed, the buyer became one ordinary creditor among many. The risk sat entirely with the household — the party least able to absorb it.
Introducing the fideicomiso moved that risk. By making it legally possible to ring-fence a project's assets, the law allowed banks to lend against a readable security, developers to raise funds for large-scale projects, and buyers to enter earlier in the construction cycle without exposing their savings to one company's financial health.
A trust industry grew out of this. The major Dominican banks created their own trust companies, and the fideicomiso became the standard backbone of residential development — to the point that today, the absence of a trust structure on a new project is itself a signal worth questioning.
The tax advantage alone is not enough: credit has to follow. This is where the scheme differs from a simple exemption.
Dominican banks operate dedicated mortgage lines for low-cost housing, on terms more accessible than standard property lending, precisely because the risk is framed by the trust structure and the target buyer falls under a public policy. Banreservas, the state bank, plays a structuring role in this segment.
Three parameters deserve checking before committing:
The classic mistake is to reason solely on the immediate tax saving — the roughly RD$162,000 of transfer tax avoided — while overlooking that the cost of credit over twenty years weighs far more heavily on the total budget.
A bajo costo file brings together four parties whose roles buyers routinely conflate:
Asking who plays each of these roles on a given project — by name, with documents — is the fastest and most revealing check a buyer can run.
The Dominican Republic places no nationality restriction on property ownership. However, the bajo costo benefits are built around a first residence and household eligibility conditions: a non-resident foreign investor seeking a yield asset generally falls outside the target of this scheme and comes under other regimes.
It is revalued annually against inflation. It rose by RD$257,195.65 between 2025 and 2026. No future figure can be announced in advance: only the DGII's annual resolution is authoritative.
Yes. The property is owned outright. Because the exemptions obtained attach to the conditions of the first acquisition, a resale is analysed under ordinary rules — check the specific situation with a tax adviser before transacting.
That is exactly what the fideicomiso exists for: sums paid sit in an autonomous patrimony, separate from the developer's balance sheet and beyond the reach of its creditors, dedicated to completing the project.
The bajo costo regime is a powerful tool, but applying it depends on precise checks: project qualification, unit price, trust structure, buyer eligibility. Every file deserves to be verified on documents.
The amounts cited reflect the public resolutions in force in 2026 and are provided as general information; they do not constitute individual tax advice.
→ Read next: Bajo Costo or CONFOTUR — which regime for which profile?