You understand the value of a dollar, and you most certainly know that even the smallest percentage of taxes owed to the government can make a noticeable dent in your pocketbook. In order to minimize these taxes while also giving Puerto Rico's economy a boost, Puerto Rico created Act 22. In January of 2012, the Puerto Rico tax law took effect, and so far about 500 high-net-worth individuals have been living in Puerto Rico and saving a fortune. Here's why:
Before even getting into the Puerto Rico tax law, it’s important to realize that the cost of property in Puerto Rico is much lower than it is at other beach destinations in the United States. Even though Bahia Beach is known for having the finest luxury homes in Puerto Rico, we are still greatly underpriced compared to similar units in other parts of the country, such as Florida or California. As the New York Times reports, an oceanfront condo at our high-end resort costs about $600 per square foot. The same setup in Miami would run you about $2,000 per square foot. These dramatic differences in the cost of living in Puerto Rico will increase your net worth, and this remains true whether you opt for condominiums or luxury homes.
If you want to lower your tax burden, there are several tax havens you can choose from, like Switzerland or the Cayman Islands. However, if you go this route, you have to renounce your citizenship when you move, which also means you will be required to pay a hefty exit tax of 23.8% on your unrealized capital gains. While the tax benefits are surely still worth it, there is a better way. Since Puerto Rico is a territory of the United States, you are still an American Citizen when you move here. You technically aren’t exiting the country, and therefore, are not required to pay the significant expatriation tax.
When you become a bona fide resident of Puerto Rico, you get an exemption from an enormous portion of your tax bill. Under Act 22 of the Puerto Rico tax law, you don’t have to pay any income tax on the dividends, interest, or capital gains you earn while living in Puerto Rico. Just one look at last year’s tax returns will show you how impressive these savings can be. However, you will want to make sure that you meet all of the eligibility requirements if you plan to capitalize on the Puerto Rico tax law.
Puerto Rico is the ideal place for you to set up roots if you appreciate the finer things in life. It allows you to reside in a tropical oasis while retaining as much of your investment income as possible. You will maintain your U.S. citizenship, so no expatriation tax is required, and you get an exemption from a substantial portion of your tax bill. Bahia Beach is truly a world-class investment, intended for the naturally sophisticated and financially savvy. Best of all, it is an investment you get to experience and enjoy.
