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The Individual Investors Act (Act 22) seeks to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico.
The U.S. tax code (Section 933) allows a bona fide resident of Puerto Rico to exclude Puerto Rico-source income from his or her U.S. gross income for U.S. tax purposes.
The Act 22 tax breaks have become a source of controversy on the island since their implementation in 2012 as Puerto Ricans living in mountainous or beach areas have reported being priced out of their neighborhoods after wealthy beneficiaries bought up nearby residential properties.
Puerto Rico Resident Requirements 183-day physical presence in Puerto Rico, to establish a presumption of residency under the Puerto Rico Tax Code. No tax home outside of Puerto Rico during the year. ... Have a closer connection to Puerto Rico than to the US or another country.
Law 68: Promotes acquisition and investment into the housing market on the island LEARN MORE. Law 187: Exempts buyers from paying property taxes for five years as well as certain closing costs for the purchase of the new residence as a primary residence, second home or investment property.
Puerto Rico Act 22 ? The Individual Investors Act As long as an individual is a bona fide resident and their source of income is in Puerto Rico, they will not have to pay the federal income tax rate which ranges from 10% to as high as 37%.
You have to pay regular US capital gain tax on the rest. If you stay in Puerto Rico for 19 years (and Act 60 sticks around), you'll get the 0% rate on 50% of your gain.