The application that, through Regulation 50-13, the Tax Administration has given to Law 253-12 on fiscal reform has adversely affected taxpayers of the Property Tax (IPI) in cases involving properties with multiple owners.
Since the establishment of this tax under Law 18-88, for practical reasons, the Administration has recognized only one owner per property, regardless of how many individuals are listed as buyers in the contract or on the real estate title certificate.
In the past, this was not particularly significant since the tax exemption threshold depended on individual properties, allowing the taxpayer to benefit from the exemption amount for each property.
If the property's value exceeded the exemption threshold, this difference became the basis for calculating the tax for the taxpayer recognized by the DGII as the owner. The co-owners would agree on how to pay the excess.
Currently, the law recognizes a tax exemption threshold of RD$6,500,000.00 per taxpayer, adjusted for inflation (Article 14).
This exemption must be applied to the entirety of the taxable real estate assets. Despite this change, the Administration continues to assign tax liability to only one of the owners, disregarding the co-owners.
This oversight was recently reaffirmed in the paragraph of Article 14 of Regulation 50-13 concerning the application of the 2012 fiscal reform law, stipulating that: "In cases of co-ownership and Legal Community of Property, ownership of the real estate will be attributed to the co-owner or spouse listed as the owner in the Tax Administration records or, failing that, to the first person listed on the validly issued property document
The problem is easily understood through the following example: the case of two people whose only property is an apartment valued at RD$10,000,000.00, with each owning 50%.
The DGII recognizes the exemption for only one of them, the one listed as the owner in the system, so this person would have to pay tax on RD$4,500,000.00, despite both owners being entitled to an exemption of RD$13,000,000.00.
In this regard, the final part of the aforementioned paragraph of Article 14 provides what could be the solution to the issue previously expressed, depending on how it is interpreted: "The taxpayer has the right to request the Tax Administration to certify the tax paid in order to take legal action for a refund.
If this legal action for a refund is valid against the Tax Administration itself, thereby recognizing the credit for the excess payment, which I doubt, then the problem would be resolved.
However, it is most likely that this regulatory provision refers to the fact that, after paying the full tax amount, the taxpayer can obtain a certificate issued by the DGII, with which they can pursue the corresponding payment from the co-owner.
Obviously, this would represent an illegality since it does not resolve the issue of recognizing the co-owner's exemption. Could the co-owner invoke their exemption if they are forced to pay a tax they should not? This is just one of several questions that arise in this regard.
While it is true that the solution of proportionally dividing the ownership of real estate such as apartments or houses is complicated for the DGII from an operational standpoint, this should not serve as an excuse to violate the legal provision regarding the minimum exemption that each owner is entitled to.
As long as this criterion is not corrected, the situation of taxpayers will continue to be unduly aggravated, especially for those who have not yet fully recovered from the harsh impact of the recent fiscal reform.