Have you heard about Puerto Rico's Act 22? It's a relatively new law (enacted in January of 2012) that gives unbelievable tax savings to new residents. It's exciting news for Puerto Rico's economy and real estate market, and it's equally exciting for the millionaires and billionaires who can expand their business and increase their net worth dramatically by moving there.
Puerto Rico is unique. It is technically part of the United States, so the residents are US citizens and passports aren’t required to travel there from the U.S.A. But since it’s an unincorporated territory (a.k.a. commonwealth), Puerto Rico gets the unique ability to make its own tax incentives. The latest is called Puerto Rico's Act 22, otherwise known as the Individual Investors Act.
Puerto Rico’s Act 22 was created to give the Puerto Rican economy a boost by attracting the empty nesters, retirees, and high-net-worth individuals who are fed up with paying so much in taxes on their earnings—especially those who make the majority of their income from capital gains. The law has a lot of parts, but here’s a brief rundown of who is eligible:
If all of those requirements are met, these are the benefits that Puerto Rico’s Act 22 offers:
Clearly, Puerto Rico’s Act 22 was designed to get people to move to the island—but more than that, it was crafted to give a boost to real estate in Puerto Rico. Think about it: What do people want when they move to the tropical oasis that is Puerto Rico? Luxury homes, of course. And what happens when a sudden influx of people want to buy luxury homes?
Puerto Rico’s Act 22 is the true definition of a win-win situation: Investors get to save on their tax bill while the luxury homes market gets a much-needed boost.