A worked 10-year projection for a CONFOTUR-exempt Sienna villa — rental income, 8% appreciation, and 15 years of zero property tax modeled out after tax.
Over a 10-year hold, a CONFOTUR-exempt villa in Las Terrenas earns its return from three stacked sources: rental yield of 6-9% annually, projected appreciation of 8% per year, and a tax exemption that keeps property tax at 0% for 15 years and transfer tax at 0% on purchase. Combined, Sienna projects total annual returns of up to 16.8%. This article models that decade for a serious investor — cash in, cash out, after tax.
Bottom Line Up Front
- CONFOTUR removes the 3% transfer tax at closing and the 1% annual property tax (IPI) for 15 years — a saving Sienna estimates at $50,000+.
- Rental yields of 6-9% plus 8% projected appreciation are the two engines of return; the tax exemption protects both.
- The first $27,000/year of net rental income is taxed at 0% under DR income-tax rules, which shelters most single-villa operations.
- Buying pre-construction at 15-25% below completion pricing front-loads appreciation before you even take title.
- A 10-year hold lets appreciation compound while you still have five years of exemption left for a buyer at resale.
What Does a CONFOTUR Villa Actually Cost to Own?
The honest answer: far less to hold than a comparable property in Florida or most of the Caribbean, because the two recurring taxes that erode ownership are switched off.
CONFOTUR is the Dominican tourism-investment incentive under Law 158-01. For an approved project like Sienna, it delivers 0% property tax (IPI) for 15 years and 0% transfer tax at purchase. Standard IPI runs at 1% annually on value above the exemption threshold, and transfer tax is normally 3% of the purchase price — so on a mid-range Sienna villa, the exemption is real money from day one.
Villa pricing at Sienna runs $156,000 to $768,000. For this model, take a $400,000 three-bedroom as our worked example.
Recurring costs you still pay
- HOA: for a 3-bedroom, $400/month ($4,800/year)
- Property management: 20% of rental income
- Insurance, utilities, maintenance: budgeted separately
The tax line is what disappears. Everything else is normal ownership cost.
CONFOTUR doesn't make a bad deal good — it makes a good deal materially better by protecting your yield and your appreciation from two taxes that quietly compound against you for 15 years.
How Much Rental Income Does a Sienna Villa Generate?
A $400,000 villa at Sienna's projected 6-9% gross rental yield produces roughly $24,000 to $36,000 in gross rent per year. Actual figures depend on occupancy, nightly rate, and whether you run short-term or long-term.
Las Terrenas draws renters year-round — 240+ days of sunshine, four beaches inside 15 minutes, and an established international market of 6,000+ residents from 20+ countries. That demand base is why yields here run ahead of the 4-6% typical across much of the Caribbean.
From gross to net
Take the mid-point, $30,000 gross:
| Line | Amount (Year 1) |
|---|---|
| Gross rental income | $30,000 |
| Management fee (20%) | -$6,000 |
| HOA (3BR) | -$4,800 |
| Insurance/utilities/maintenance | ~-$4,000 |
| Net operating income | ~$15,200 |
Whether you weight toward nightly bookings or a steady annual tenant changes that math — our Airbnb vs long-term rentals breakdown walks through both. For the deeper income mechanics across the whole market, the cluster hub — the ROI reality for Las Terrenas rental income — is the place to start.
How Does CONFOTUR Change the Tax on That Income?
CONFOTUR protects the asset; DR income-tax rules protect much of the cash flow. In practice, a single well-run villa often pays little to no income tax.
Under Dominican tax law, the first $27,000/year of net income is effectively untaxed for the personal exemption band that applies to CONFOTUR rental structures. Our worked villa's net operating income of ~$15,200 sits comfortably under that line — so in this model, rental income tax is $0.
Compare that to a Florida rental, where you'd pay 1-2% annual property tax on the home's value and report rental income against your US bracket. The Dominican picture is structurally lighter.
Where income tax does appear
Scale up — two or three villas, or a high-occupancy nightly operation clearing well past $27,000 net — and DR income tax applies to the excess. The DGII sets the schedule; how it interacts with your home-country filing is where a specialist earns their fee. Our DR rental income tax guide covers the thresholds in detail.
The IMF's country data shows the Dominican Republic among the faster-growing economies in the region, which underpins both the rental-demand and appreciation assumptions in this model — you can review the IMF's Dominican Republic country profile for the macro backdrop.
What Does Appreciation Add Over a Decade?
Appreciation is the larger of the two return engines over a 10-year hold, and CONFOTUR shields the gain at exit from transfer tax.
Sienna projects 8% annual appreciation, in line with Las Terrenas' historical 8-12% range. Applied to our $400,000 villa, compounding at 8%:
| Year | Projected value |
|---|---|
| Purchase | $400,000 |
| Year 3 | ~$504,000 |
| Year 5 | ~$588,000 |
| Year 10 | ~$864,000 |
That's roughly $464,000 of projected appreciation across the decade — before counting a single dollar of rent.
The pre-construction head start
Buying pre-construction at Sienna means paying 15-25% below completion pricing. That discount is appreciation you capture the moment the project delivers, ahead of the 8% curve. If you're weighing this against buying a finished unit, our pre-construction vs resale analysis lays out the trade-offs.
Modeling the Full 10-Year Hold
Here's the decade stacked together for the $400,000 three-bedroom, using Sienna's projection assumptions.
The cumulative picture
| Component | 10-year projection |
|---|---|
| Net rental income (avg ~$15,200/yr, rising) | ~$175,000+ |
| Property appreciation (8% compounded) | ~$464,000 |
| Property tax paid (CONFOTUR 0%) | $0 |
| Transfer tax paid at purchase (CONFOTUR 0%) | $0 |
| Rental income tax (under $27k band) | ~$0 |
Two things stand out. First, appreciation does the heavy lifting — which is why the pre-construction discount and the location matter more than squeezing another point of yield. Second, the tax lines are all zero, and that's not a rounding convenience — it's the structural difference CONFOTUR makes versus a Florida or Barbados hold.
Sienna's headline figure of up to 16.8% total annual return is the blend of yield plus appreciation plus the effective 2-3% that the tax exemption adds back. Run your own numbers with the Las Terrenas ROI calculator or the ROI projection tool.
Curious how this decade looks for your budget and villa size? Book a Discovery Tour and sit down with the team to model it against real inventory.
Why a 10-Year Hold Specifically?
Because it lets appreciation compound fully while leaving the CONFOTUR exemption attractive to your eventual buyer.
The exemption runs 15 years from when the clock starts for a pre-construction purchase — a detail worth getting right, which our CONFOTUR timing guide explains. Sell at Year 10 and the next owner inherits roughly five years of remaining 0% property tax, a genuine selling point that supports resale value.
Ten years is also long enough to ride out any single soft patch in the rental market and short enough to keep your capital liquid for the next move. Shorter holds lean too heavily on transaction timing; much longer holds tie up capital past the exemption's most valuable window.
Frequently Asked Questions
Does CONFOTUR really mean zero property tax for 15 years?
Yes. For a CONFOTUR-approved project like Sienna, property tax (IPI) is exempt at 0% for 15 years and transfer tax is 0% at purchase, under Law 158-01. Standard rates are 1% annual IPI and 3% transfer tax.
Is my rental income tax-free in the Dominican Republic?
The first $27,000/year of net rental income falls under the exemption band, so a single well-run villa often owes no DR income tax. Income above that is taxed on the DGII schedule, and you must still consider home-country reporting.
What return should I expect over 10 years?
Sienna projects 6-9% rental yields, 8% annual appreciation, and up to 16.8% total annual return. On a $400,000 villa, that models to roughly $464,000 in appreciation plus $175,000+ in net rent over the decade.
Can I sell before the 15-year exemption ends?
Yes, and it's often smart. A Year-10 sale hands the buyer around five years of remaining 0% property tax — a real advantage that supports your resale price.
How does this compare to a Florida rental property?
Florida charges 1-2% annual property tax with no equivalent exemption, and purchase prices run 45-60% higher than comparable Las Terrenas villas. The Dominican structure is materially lighter on both the tax and entry-price side.
Key Numbers to Take Away
A CONFOTUR-exempt Sienna villa is built to compound: rent covers costs and often runs tax-free under the $27,000 band, appreciation at 8% drives the bulk of the return, and the 15-year exemption keeps property and transfer taxes at zero throughout your hold. On a $400,000 three-bedroom, the decade models to hundreds of thousands in combined gain with the tax lines reading zero.
If you're ready to pressure-test these numbers against a specific villa and your own tax situation, contact the Sienna team or start your buying journey. Bring your assumptions — we'll model the decade with you, line by line.
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.
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.
