Puerto Rico Real Estate, Tax Breaks, Pros and Cons

Puerto Rico Real Estate, Tax Breaks, Pros and Cons

Moving to Puerto Rico comes with some great benefits.
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  • Americans move to Puerto Rico for the climate, adventure and tax breaks.
  • People need to consider other aspects such as schools struggling to meet demand.
  • Even things like finding new furniture can be difficult on a small island.

Puerto Rico is becoming an increasingly popular destination for Americans looking to relocate for tax purposes.

While the island boasts promises of adventure and financial incentives designed to attract investors and entrepreneurs, the move comes with challenges. Newcomers to Puerto Rico told Business Insider they’re struggling to navigate the complexities of healthcare, education and even shopping. the goods like furniture.

“I’m not sugarcoating it; it’s not for everybody,” Ricky said Santana is the founder and managing partner of Colectivo Group, a real estate firm in Puerto Rico that helps Americans relocate to the island. “You have to realize you’re moving to a small island in the Caribbean where it’s still great, but there will be some compromises.”

According to data collected by the US Census Bureau, between 2021 and 2022, approximately 27,000 people moved from US states to Puerto Rico. Tax relief of the territory, Law 60is a big draw for many.

Any mainlander can move to Puerto Rico. But if they obtain residency, they can apply for a 15-year decree under Act 60. If approved, the individual or business would only have to pay a flat 4% interest on the income and could receive a 75% reduction in property taxes.

In addition, people do not have to pay any tax on capital gains that accrue once they become residents, and businesses benefit from a 50% reduction in municipal license taxes.

These preferences have their detractors and can be a politically hot topic locally. According to Santana, policymakers must find ways to appease local Puerto Ricans who are upset that they are not getting the same tax breaks, while quietly acknowledging that the incentives are working to boost the island’s economy.

The economic impact is real, but be prepared

San Juan’s shopping and nightlife have been compared to Miami.
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Before moving to Puerto Rico, Santana said, it’s about making sure the whole family is on board and has what they need.

“If your family, your spouse, can’t qualify for Puerto Rico, it doesn’t matter how much tax you withhold, it’s not going to work,” Santana said.

One of the biggest challenges for families with young children is finding the right school, Santana said. He added that the island has several well-regarded bilingual schools, but they are struggling to handle the growing population, especially in the most desirable areas for mainlanders moving to the island.

One of those areas is the town of Dorado, 20 miles west of San Juan on the north side of the island, where many of the more expensive homes are being built. While a family may find the home and community of their dreams in the area, children may have to travel 35 to 40 minutes each way to school in San Juan if there is no room at the local school.

Map of Puerto Rico.
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Other challenges include health and services

Another big issue that people should consider before moving to Puerto Rico is the health care system.

Sarah Lindsey and Sean Flynn, a semi-retired couple moving from Austin to Humacao in 2021, previously He told BI that health insurance is cheap, but “you get what you pay for.”

Health care can be especially problematic if you need a specialist on the island, Santana said. If you can find one, you’ll have to wait a long time, and other times you may need to fly to Miami or New York for proper care.

Ricky Santana, founder and managing partner of Colectivo Group, a firm that helps mainlanders move to Puerto Rico.
Colectivo Group

Puerto Rico already “health care crisis“The situation worsened in 2015 and the following three years. In 2017, the year after Hurricane Maria, about 15% of Puerto Rico’s health care workforce left the island This was reported by Vox with reference to the information of the College of Physicians and Surgeons of Puerto Rico.

Lindsey said if someone is interested in moving to Puerto Rico, the first thing he will ask them is about their health.

“Maybe you want to go there, but if you have health issues, maybe not,” Lindsey said. “It’s better for younger and healthier people.”

Local and federal governments are working improve health careLindsey and Flynn said a special effort is being made to add clinics that can better serve seniors.

If you are young and adventurous, Puerto Rico may be the perfect fit.
Kimberly Sue Walker/Getty Images

Santana also tells customers to be patient on the island, especially with services.

“You’ve got to understand that there’s going to be some pullback in Puerto Rico,” he said.

The lure of tax breaks drives up real estate prices

Because Puerto Rico is a US territory, mainland Americans can buy real estate on the island without any restrictions. The influx of mainland Americans affected the island’s high-end real estate market.

Five years ago, developers focused on building homes ranging from $2 million to $4 million, Santana said. Now developers are creating homes from $20 million to $40 million.

“It’s so mind-boggling for people moving to the island that we didn’t have this particular inventory.” he said. “So developers have changed to adapt to the new requirements.”

A $20 million home is for sale in Dorado, Puerto Rico.
Colectivo Group Real Estate

Prices It’s more acceptable in some areas, like Flynn and Lindsay’s new Humacao home, about 90 minutes from San Juan on the island’s southeast coast.

Regardless of where transplants are located, they may struggle to find necessities such as chairs, beds, and couches.

Santana said that selling furnished homes to people who come to the island without their own furniture has become popular. Otherwise, buying furniture usually means shipping it from the US, increasing the cost and waiting time.

Lindsey and Flynn said it’s often the same for smaller items, as Amazon deliveries can take up to a month to arrive.

Santana suggests that anyone on the fence spend more time there than a typical vacation before making their final decision.

“Maybe stay for the summer, stay for a month,” Santana said. “Make sure it fits properly.”

If you have moved to Puerto Rico for tax benefits and would like to share your experience, please contact this reporter. [email protected].

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