PUERTO RICO AS INVESTMENT
Puerto Rico is home to more than postcard-perfect beaches and vibrant culture. Home to the U.S.’ most fertile and advanced business ecosystem. A tropical paradise tailor-made to foster entrepreneurship and innovation.
U.S. jurisdiction nested in the middle of the Caribbean, Puerto Rico has been – and continues to be – an important social and economic bridge between the Americas, connecting one to the region and the world with ease. As part of the United States, the laws for doing business in Puerto Rico allow for the same level of operational security, stability, and protections, as the mainland allowing investors to place funds with confidence.
The idea behind the incentive afforded by Act No. 22 is 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. This relocation is resulting in new local investments in real estate, services, and other consumer products, and in capital injections to the Puerto Rico banking sector. All of which will continue to accelerate the economy of the island.
4.0% Corporate tax rate
100% Tax exemption on all dividends and interest income
100% Tax exemption on all capital gains
Known as the Economic Incentives Act for the Development of Puerto Rico, Act. No. 73 was established to provide the adequate environment and opportunities to continue developing a local industry, offer an attractive tax proposal, attract direct foreign investment and promote economic development and social betterment in Puerto Rico.
1.0% Fixed income tax rate for innovative firms introducing “pioneer” activities in Puerto Rico
4.0% Fixed income tax rate
100% Tax exemption on dividend distribution
HOSPITALITY / HOTEL DEVELOPMENT
The benefits of the Hospitality and Hotel development Act 74 will remain valid for a period of 10 years from the starting date of the eligible tourism-related project, and the business operation will be entitled to a 10-year extension. The tax credit is equal to 10% of the total project costs, or 50% of the cash investment made by investors (whichever is less)
100% exemption on municipal construction excise taxes
100% exemption on sales and uses taxes
100% exemption on excise taxes and other municipal taxes for new projects, or 90% exemption on existing projects
90% exemption on income tax or 100% exemption if the project is located in the island municipalities of Vieques or Culebra
Up to 90% exemption on personal and real property municipal taxes
What does a typical real estate investment look like in Puerto Rico?
We specialize in Single Family Residential (SFR) units and 2-4 family units, purchased directly from Housing and Urban Development (HUD), Bank REO’s and vacated sellers. These properties are purchased at deep discounts for cash, or in some cases, using investor loans funded by FHA or Fannie Mae.
After purchase, we rehab the properties and sell them for a profit. We have a contractor license and over 30 years of experience in construction and construction management. On average, we purchase six or more properties per quarter for a price of $40,000 per property. The average rehab is $25,000, with a projected sales price of $95,000 on SFR. The projected ROI for each investor with a turnover of the investment twice a year is 27.5%. A 10% tax credit is available for larger investment opportunities. Dividends will be paid upon sale of each property
Larger investment opportunities are hotel or Airbnb properties, with typically seven or more units, that are rented daily or weekly. These units are unique to Puerto Rico tax laws that were established in 2012. Dividends will be taxed at 4% by the U.S IRS if generated by investing in P.R properties through our LLC.
We use Steward Title, Escrow, and Remax to make the investment process easy and transparent. In addition, we take advantage of our relationship with established attorneys, who review and edit our real estate contracts according to U.S. law. We also work with property managers, exterminators and inspectors to make each real estate transaction an enjoyable and profitable experience for our clients.
We make sure you get
the best return for your investment.
Get in touch to find out what we can do for you!