Airbnb Rules in Cabarete: What You Can Actually Rent

The short version: Yes, short-term rentals are legal in the Dominican Republic, and Cabarete is one of the most Airbnb-friendly towns on the North Coast. But whether your unit can be rented short-term is decided by your building’s bylaws, not by the government. That is the detail that catches buyers out.

Is short-term rental legal in the Dominican Republic?

There is no national law banning short-term rentals in the DR, and no Cabarete municipal permit system like you would find in Barcelona or New York. Tourism is the engine of this economy and the government treats it that way. What regulates your rental in practice is:

• Your building’s reglamento (bylaws). Some condos welcome short-term guests. Some require minimum stays of a week or a month. A few ban rentals outright. This is binding and enforceable.
• Taxes. Rental income earned in the DR is taxable in the DR, and platforms are increasingly reporting host income. A good local accountant is cheap insurance.
• Tourism incentives (Confotur). Some newer projects are approved under the Confotur law, which was designed to encourage exactly this kind of tourism investment, and these are generally rental-friendly by design.

Which Cabarete neighborhoods allow short-term Airbnb rentals?

Area	Short-term rental reality
Kite Beach	The strongest Airbnb market in town. Most condo buildings are rental-friendly and many were built for it. High demand December through April and June through August.
Cabarete Bay / Centro	Strong demand from tourists who want to walk to restaurants and nightlife. Check bylaws building by building.
Encuentro Beach	Surf-driven demand, longer average stays, quieter buildings. Some communities prefer monthly rentals.
Perla Marina	Gated residential community. Villas generally rent fine; some sections and condos have stricter rules. Verify before you buy.
Sосú	Large established rental market with a wide range of buildings and rules.

If you’re weighing Sosua specifically, Casa Linda is the North Coast’s most established gated community and one of the best-documented for rental performance and HOA structure. Worth using as a benchmark.

How much can you earn from Airbnb in Cabarete?

A well-run one or two bedroom condo near Kite Beach typically achieves occupancy in the 50 to 70 percent range across the year, with nightly rates roughly US$60 to US$150 depending on size, finish, and distance to the beach. Gross yields of 6 to 10 percent are achievable on well-bought units. For a deeper look at how the numbers actually work, see the Rental ROI guide. They are not automatic. Anyone promising you 15 percent guaranteed is selling bulto.

The costs people forget: management (typically 15 to 25 percent of revenue), electricity for guests who run the AC all day, HOA fees, and the slow months of September to November.

Do US citizens owe US tax on rental income from a Dominican property?

The IRS taxes American citizens on worldwide income. It does not matter where you live, where the money lands, or whether you already paid tax in the DR. Your Dominican rental income goes on your US return. Period.

As a US Airbnb host with a Dominican property, you will deal with four specific filings:

1. Schedule E: net rental income from your Dominican property goes here on your 1040
2. Form 1116: foreign tax credit using what you already paid in the DR; covers most or all of the US tax
3. FinCEN 114 / FBAR: required if a Dominican bank account exceeds $10,000 at any point during the year
4. Form 8938: required if total specified foreign financial assets cross the FATCA thresholds ($50,000 for single filers living in the US)

Schedule E. Your net rental income from the DR gets reported on Schedule E, the same form used for a US domestic rental property. You report gross income, deduct allowed expenses (management fees, HOA dues, maintenance, depreciation), and the net figure flows to your 1040.

You are probably not double-taxed, but you have to file. The DR taxes rental income too. You can claim those DR taxes as a foreign tax credit on Form 1116, which reduces your US tax bill dollar for dollar up to the US tax attributable to that foreign income. For most investors with a straightforward structure, the credit covers most or all of the US liability. But whether it covers all of it is accountant work, not bar math.

FBAR. If rental income gets deposited into a Dominican bank account and that account’s balance exceeds $10,000 USD at any point in the calendar year, you have a FinCEN 114 filing requirement. That is the FBAR. It is due April 15 and extends automatically to October 15. The penalties for missing it can be substantial even when you owe zero US tax. Set a calendar reminder before you ever receive your first rent payment.

FATCA. If the total value of your specified foreign financial assets crosses IRS thresholds ($50,000 for single filers living in the US; higher for married filers and Americans living abroad), Form 8938 goes with your 1040. A directly-owned foreign property is generally not a specified foreign financial asset. A Dominican bank account or an interest in a Dominican company is.

Get the right accountant before you close. A US CPA who has never dealt with foreign rental income and a Dominican contador who does not know what Schedule E is are a combination that costs you twice: once in missed deductions and again in penalties. Ask both directly whether they have handled DR rental income before. If they hesitate, keep looking.

Thinking about a rental property? Tell me your budget and I will tell you honestly which buildings rent well and which ones only look like they do. Find out how I work with buyers, browse the current listings, or write me directly.