Short answer: as a US citizen or resident you owe US tax on worldwide income, so rent from a Dominican property goes on your federal return (generally Schedule E), usually in US dollars. Foreign real estate you own directly is not reported on Form 8938, but a Dominican bank account can trigger an FBAR, and holding the property through a company or trust changes the analysis. Foreign-use residential rental property is depreciated over 30 years under the Alternative Depreciation System (ADS). This is general orientation based on IRS.gov. Talk to a CPA experienced in international tax before you file.

Want to talk about your project? Message us on WhatsApp.

This article is for investors and property owners. It does not cover Dominican tax law beyond pointing out where you need local advice.

Do I have to report Dominican rental income to the IRS?

Yes. IRS Publication 54 states that US citizens and resident aliens are subject to US tax on their worldwide income, and that amounts on your return must be expressed in US dollars (IRS, Pub. 54). Rent collected in pesos or deposited in a Dominican account is still reportable.

On Schedule E, the IRS instructions say to enter the city, province or state, country and postal code for property located in a foreign country. You also report fair rental days and personal use days for each property (IRS, Schedule E instructions).

Personal use matters. Under the same instructions, you are treated as using the unit as a home if personal use exceeds the greater of 14 days or 10% of the days rented at fair rental value. In that case, expenses are allocated between personal and rental use. If you use it as a home and rent it fewer than 15 days, you report no rental income and take no rental expenses.

Is there a US-Dominican income tax treaty?

The IRS’s A-Z list of US income tax treaties shows no entry for the Dominican Republic under “D” other than Denmark (IRS, treaties A-Z). Do not assume treaty-reduced rates or tie-breaker rules. The two countries do have information-exchange arrangements (a 1989 tax information exchange agreement and a 2016 FATCA intergovernmental agreement, per IRS documents surfaced in our research), so assume account information can be shared. Your CPA should confirm the current status.

How do I avoid paying tax twice on the same income?

Through the foreign tax credit (or, alternatively, a deduction). The IRS explains the credit is meant to reduce double taxation on foreign-source income taxed by both countries. You may claim the credit, generally on Form 1116, or deduct foreign income taxes on Schedule A, and the choice is made each year for all foreign taxes (IRS, Topic 856).

Key points:

• The credit is limited to the smaller of the foreign tax paid or accrued and the US tax attributable to your foreign-source income, computed by income category.
• Only income taxes (and taxes in lieu of income taxes) qualify, and only the legal and actual liability; fully refundable taxes do not qualify (IRS, qualifying foreign taxes).
• The exception that lets you skip Form 1116 is limited to passive income reported on a payee statement such as a 1099-INT or 1099-DIV, under a dollar cap (IRS, Topic 856). Direct rental income does not fit that description. That conclusion is our inference, and which Form 1116 category rent falls into is for your CPA.
• Property taxes and sales taxes are not income taxes. The IRS pages we reviewed do not address them, so ask your CPA how they are treated (they may be deductible rental expenses instead).

How is a foreign rental property depreciated?

This is where foreign property differs most from a US rental:

• IRS Publication 946 requires ADS for “any tangible property used predominantly outside the United States” (IRS, Pub. 946).
• Under ADS, residential rental property placed in service after 2017 has a 30-year recovery period (IRS, Pub. 946). Publication 527 shows 27.5 years under the general system and 30 under ADS (IRS, Pub. 527). The foreign-use rule is what pushes you into the longer period.
• You use the straight-line method with a mid-month convention, and land is not depreciable (IRS, Pub. 527).

Hypothetical example (not a forecast or tax advice). You buy a condo for US$220,000 and allocate US$176,000 to the building. Annual depreciation under ADS is about US$176,000 / 30 = US$5,867 (adjusted in the first and last year for the mid-month convention). With US$18,000 of rent and US$7,000 of operating expenses, income before depreciation is US$11,000 and net Schedule E income is roughly US$5,133, before any Dominican taxes or other rules. The numbers are made up to show the mechanics.

On condos and presale purchases, how the price is split between building and land affects the depreciation, so keep the closing documents and talk to your CPA about the allocation.

Can I deduct rental losses?

Often not immediately. Rental real estate is generally a passive activity. IRS Publication 925 lets you deduct up to US$25,000 of loss against nonpassive income if you actively participate, but the allowance is reduced by half of your modified adjusted gross income above US$100,000 and generally disappears at US$150,000. You report it on Form 8582 (IRS, Pub. 925).

Higher earners may also owe the 3.8% net investment income tax, which includes rents. It applies above a modified AGI of US$200,000 for single filers and US$250,000 for joint filers, computed on Form 8960 (IRS, Topic 559). Exceptions exist for rents from a trade or business to which the tax does not apply.

Do I need to file an FBAR or Form 8938?

It depends on what you hold. Directly owned real estate and bank accounts are treated differently.

FBAR details: filed electronically through FinCEN’s BSA E-Filing System, not with your tax return; due April 15 with an automatic extension to October 15 (IRS, FBAR).

Form 8938 details: for taxpayers living in the US, the threshold is US$50,000 at year-end or US$75,000 at any time (unmarried) and US$100,000 / US$150,000 (married filing jointly); for those living abroad, US$200,000 / US$300,000 and US$400,000 / US$600,000. It is filed with your return, and failure to file can carry a US$10,000 penalty (IRS, FATCA summary). Some accounts appear on one form and not the other.

Entities and trusts. If you own through a foreign trust, the IRS says Form 3520 may be required when you transfer property to it, receive distributions, or are treated as its US owner, with significant penalties for non-compliance (IRS, foreign trusts). Whether a particular Dominican structure, including a real estate fideicomiso, counts as a foreign trust for US purposes is a technical question for your CPA. Foreign companies can bring other forms we do not cover here.

What happens when I sell?

You report the sale on Form 8949 and Schedule D. If you held the property more than one year, the gain is long-term and taxed at 0%, 15% or 20% depending on taxable income (IRS, Topic 409). Points to plan with your CPA:

• Depreciation you claimed reduces your basis and raises your gain. This is the general rule; confirm details, including depreciation recapture treatment, with your CPA.
• The Dominican Republic’s Law 30-26 imposes a 10% tax on individuals’ capital gains from real estate sales, as a single final payment within six months, with the base pending regulation. It applies to deeds signed from June 18, 2026 (inmobiliario.do; Siempre al Dia). Tax paid there may be creditable in the US; your CPA must confirm.
• Exchange rates on the purchase and sale dates can affect the dollar gain.

What about the Dominican side?

Dominican taxes on rent, including withholdings for non-resident owners and sales tax on short-term stays, depend on rules and recent changes we could not confirm in primary sources. Get a written opinion from a Dominican tax attorney or accountant before you list the property. The 3% transfer tax at purchase is covered in our US investor guide.

Owner’s checklist

• [ ] Keep the deed, purchase contract, closing statement and payment receipts (your cost basis).
• [ ] Separate land value from building value.
• [ ] Track rental days and personal-use days each year.
• [ ] Record income and expenses in US dollars and note the exchange rates used.
• [ ] Keep proof of Dominican taxes paid for the foreign tax credit.
• [ ] Check whether your combined foreign accounts exceed US$10,000 (FBAR).
• [ ] Check the Form 8938 thresholds, especially if you own through an entity.
• [ ] Review passive loss rules and the net investment income tax.
• [ ] Plan the sale with both tax systems in mind.

Frequently asked questions

Do I report my Punta Cana condo on Form 8938? Not if you own it directly. The IRS says foreign real estate is not a specified foreign financial asset. An interest in an entity that owns it can be reportable (IRS).

Does my Dominican bank account trigger an FBAR? It does if your aggregate foreign financial accounts exceed US$10,000 at any time during the year (IRS).

What is the depreciation period for a rental condo abroad? Property used predominantly outside the US uses ADS, which sets 30 years for residential rental property placed in service after 2017 (IRS, Pub. 946).

Can I claim a credit for Dominican taxes? Qualifying foreign income taxes can be claimed as a credit or deducted, as an annual choice (IRS). Property and sales taxes generally need separate analysis.

Is there a tax treaty with the Dominican Republic? Not on the IRS’s A-Z list of income tax treaties (IRS).

Need help?

Netix does not provide tax advice. We help developers present projects to investors with professional materials: investor dossiers, executive decks and commercial strategy. See our capital raising service or our project creation service.

For information only; not legal, tax or investment advice. Consult a CPA experienced in international taxation and a Dominican attorney. IRS rules change, and citations refer to the pages reviewed. Figures current as of October 13, 2026.