CONFOTUR wipes out property and transfer tax, but it does not touch your operating deductions. Here's how depreciation and furnishing write-offs still work on a rented Las Terrenas villa.
CONFOTUR's exemption covers property tax (IPI), transfer tax, and income tax on qualifying rental revenue — but it does not replace the ordinary operating deductions that reduce your taxable rental income in the first place. Depreciation on the building, furnishing write-offs, management fees, insurance, and maintenance all still apply under normal Dominican tax rules. The two systems stack: one removes a tax line, the others shrink the base it would have applied to.
The Short Version
- CONFOTUR removes taxes; deductions reduce the taxable base — they are separate mechanisms that work together, not either/or.
- Depreciation and furnishing costs are ordinary business deductions under Dominican tax law, and CONFOTUR does not disable them.
- Furnishings are a real drag on net yield — a full furniture package can run tens of thousands of dollars and needs replacing on a cycle.
- Land does not depreciate; the building and its contents do — the split matters for how much you can write off.
- Net yield of 6-9% at Sienna already assumes these costs are managed — the deductions are what protect the "net" in net yield.
What Does CONFOTUR Actually Exempt — and What Does It Leave Alone?
CONFOTUR exempts qualifying tourism projects from specific taxes; it does not rewrite how rental income is calculated. Under Law 158-01, a qualifying project can receive a 15-year exemption at 0% on property tax (IPI), the 3% transfer tax, and income tax on rental earnings the project generates. Sienna currently holds provisional status under Resolution 203-2024, so these benefits apply to qualifying projects in general rather than being finally confirmed for any individual buyer yet.
Here is the distinction most investors blur: exemptions and deductions are different tools. An exemption removes a tax entirely. A deduction lowers the income figure a tax would be calculated on. Even where CONFOTUR zeroes out the income tax on rental revenue, the deductions that would have shrunk that revenue base still exist in the tax code — they simply matter more for any income that falls outside the exemption, and for your own honest read of profitability.
For the full mechanics of the exemption, see our complete breakdown of CONFOTUR benefits.
Exemptions and deductions are not the same lever. One erases a tax; the other shrinks the number that tax is measured against. Understanding both is what turns a headline rate into a real net yield.
How Does Depreciation Work on a Dominican Rental Villa?
Depreciation lets you deduct the wearing-out of your building over time as a cost against rental income — but only the building, never the land. Dominican tax law treats real property assets as depreciable business assets when they generate income, and the structure loses accounting value on a schedule while the underlying El Jamito lot does not.
The land-versus-building split
Say you buy a lot from $74,100 and build a villa on it. The lot itself is not a depreciable asset — land is assumed to hold or gain value. The villa structure, its fixtures, and its systems are what depreciate. When you allocate your total cost between land and building, only the building portion feeds the depreciation deduction. Getting that split right at purchase is worth doing carefully; it determines your deductible base for years.
Why this matters even under CONFOTUR
If your rental income is exempt, why track depreciation at all? Two reasons. First, exemptions have limits and timelines — the clock and the qualifying revenue are defined, and income outside those bounds is taxed normally, where depreciation reduces it. Second, depreciation is central to any honest ROI model. A villa that shows a paper profit but is quietly consuming its structure and fittings is not as profitable as it looks. Our 10-year CONFOTUR villa cash-flow model walks through how these figures interact over a full hold.
Are Furnishing Costs Deductible on a Rented Villa?
Yes — furnishings a villa needs to earn rental income are ordinary deductible costs, and they are one of the largest recurring drags on net yield that new investors underestimate. Beds, sofas, an outdoor dining set that survives salt air, a properly specced kitchen, linens, and the electronics guests expect are all business expenses when the property is rented.
Furnishing is not a one-time cost
Here's the reality that surprises first-time landlords: furnishings wear out on a cycle. Rental use is harder on a sofa than family use. Sun, humidity, and salt in a coastal-adjacent climate age textiles and outdoor furniture faster than they would in Montreal or Munich. Plan for periodic replacement, not a single upfront spend. Our guide to furnishing a Caribbean villa with local versus imported pieces covers where the money actually goes.
Treatment: expense or depreciate?
Some furnishing items are written off as they wear; larger fitted or higher-value assets may be depreciated over their useful life alongside the building. The practical point is that these costs are not lost — they legitimately reduce taxable rental income under normal rules, and CONFOTUR does nothing to remove that treatment. A Dominican accountant will set the correct method for each category.
How Do These Deductions Change Your Net Yield?
Deductions are exactly what separates gross yield from the 6-9% net rental yield Sienna models. Gross rent is a headline; net yield is what lands in your account after operating costs. Depreciation, furnishing replacement, management, insurance, and maintenance are the line items that stand between the two.
A worked cost table
The table below is illustrative — it uses Sienna's published figures where they exist and shows the type of costs involved, not a guaranteed budget for any specific villa.
| Cost / benefit line | How it's treated | Effect on your numbers |
|---|---|---|
| Property tax (IPI) | CONFOTUR: 0% for 15 years (standard 1%) | Removed entirely |
| Transfer tax on purchase | CONFOTUR: 0% (standard 3%) | Removed at acquisition |
| Building depreciation | Ordinary deduction (building only, not land) | Reduces taxable rental base |
| Furnishing package | Deductible; expensed or depreciated by item | Reduces base; recurs on a replacement cycle |
| Rental management fee | Deductible operating cost — 20% of rental income at Sienna | Reduces net, but outsources the work |
| HOA fee | Deductible; $280-$560/month by villa size (1-5BR) | Fixed carrying cost |
| Insurance & maintenance | Deductible operating costs | Reduces base; protects the asset |
Reading the table
Notice the pattern: CONFOTUR clears the two tax lines at the top, and every line below it is a deduction you'd claim regardless. That's the whole point. The exemption and the deductions occupy different rows. For a fuller picture of how occupancy drives the outcome, our rental break-even analysis shows how many weeks it takes to cover carrying costs — and you can run your own figures with the Sienna ROI tools.
What Should You Set Up Before the First Guest?
Get the ownership structure, the cost allocation, and the accountant in place before you furnish — retrofitting good records is painful and expensive. The decisions you make at purchase shape your deductions for the entire hold.
A short setup checklist
- Decide whether to hold in your personal name or a Dominican company — this affects how deductions and reporting work
- Get a clean land-versus-building cost allocation documented at purchase
- Keep every furnishing invoice — undocumented spend is undeductible spend
- Engage a Dominican accountant who knows CONFOTUR projects
- Confirm your home-country reporting obligations separately — CONFOTUR is a Dominican exemption, not a home-country one
For the ownership-structure decision, our comparison of personal name versus a Dominican company lays out the trade-offs. And remember that Dominican rental-income rules are documented by the tax authority, DGII — the general framework for taxing rental income is a useful companion read.
Frequently Asked Questions
Does CONFOTUR mean I don't need to track deductions at all?
No. CONFOTUR removes specific taxes, but deductions like depreciation and furnishing costs still define your true net yield and still apply to any income outside the exemption. Tracking them is both a tax matter and an honesty check on your ROI.
Can I depreciate the land my villa sits on?
No. Land is not a depreciable asset under Dominican tax rules — only the building, its fixtures, and its systems depreciate. That's why allocating your purchase cost correctly between the El Jamito lot and the structure matters.
Are furniture and appliances one-time write-offs?
It depends on the item. Smaller furnishings are typically expensed as they wear; larger or fitted assets may be depreciated over their useful life. In a coastal climate, budget for a replacement cycle rather than a single upfront cost.
Does my home country recognise the CONFOTUR exemption?
Not necessarily. CONFOTUR is a Dominican exemption. Your reporting obligations in Canada, the US, Germany, or elsewhere are governed by home-country law and any tax treaty, so coordinate with an advisor there separately.
Who sets the correct depreciation method for my villa?
A Dominican accountant familiar with tourism-sector properties. According to the Dominican tax authority, DGII, depreciable assets follow defined categories, and matching each furnishing and building component to the right one is their job, not a guess you should make alone.
The Bottom Line
CONFOTUR and rental deductions are two different levers: the exemption erases property and transfer tax, while depreciation and furnishing write-offs shrink the taxable income underneath it. Both survive together, and both belong in any honest read of your net yield. To see how these numbers play out for a specific villa and holding period, book a no-pressure consultation with our Las Terrenas team.
This article provides general information about property in the Dominican Republic and is not personal financial, legal, or tax advice. Figures such as CONFOTUR benefits, taxes, and returns depend on your circumstances and can change — confirm specifics with a licensed Dominican attorney, tax advisor, or the relevant authority before making a decision.
Stay in the loop
Have questions about this?
Talk to our sales team directly — we'll answer on WhatsApp or by phone.
Written by
Sienna Terrenas Editorial Team
The Sienna Terrenas editorial team covers buying, owning, and living in Las Terrenas, Dominican Republic — from the purchase process and CONFOTUR tax strategy to villa construction and Caribbean community life, drawing on the team's on-the-ground experience in the area. Meet the Sienna Terrenas team.
