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PUERTO RICO PROPERTY & TAX GUIDE

Puerto Rico is a Commonwealth of the United from 8.03% to 11.83%, which vary depending on 10% on the actual net capital gain and in the case of
States. Puerto Ricans get the best of both worlds: the municipality where the property is located. For other non-residents the applicable tax will be 29%
gorgeous tropical beaches and the benefits of example, the rate in Rio Grande for year 2013-2014 on the actual net capital gain, assuming the property
having American citizenship. is 8.83%. Under Act 216 a five year 100% real prop- has been held for a period in excess of six months.
erty tax exemption may be available for residential
property acquired on or before August 31, 2015.
TAXES NOTARY FEES

Rental income: Generally, gross rental income of It is mandatory that a notary prepare the sale and
non-residents is taxed at a flat rate of 29%, CAPITAL GAINS TAX purchase deed. Maximum allowable notary fee is
withheld by the tenant. However, until December Earnings of non-resident individuals from the sale of 1% of the property value for the first US $500,000
31, 2020, under act 132-2010 lessors may claim a a property are subject to a withholding tax of 25% plus 0.5% of the amount in excess of $500,000.
100% exemption from Puerto Rico income tax on (10% in the case of U.S. citizens), which is levied on
rental income. the gross selling price minus the cost of the property
and certain selling costs incurred by the seller. This REGISTRATION AND FILING FEES
withholding tax can be credited to the non-residents Several fees must be paid to different offices such as
INCOME TAXES
final tax liability. The final tax liability is based on the Municipal Collection Center (CRIM), Treasury
A non-resident alien not engaged in a trade or busi- the actual capital gain (which included property Department and Property Registry. These fees are
ness in Puerto Rico is generally taxed at a flat rate of improvements as a deduction. Said improvement minimal and are not expected to exceed 0.75% of
29% (withheld) on Puerto Rican-sourced profits and costs are not considered for withholding purposes). property and mortgage value.
income including investment income, rental income In the case of U.S. citizens the applicable tax will be
(discussed above) and capital gains.
INTERNAL REVENUE STAMPS

Internal Revenue Stamps are purchased to be can-
CURRENCY celled on the original of the deed of purchase and
Puerto Rico uses the U.S. Dollar (USD) sale and the first certified copy of deed to be filed in
the Property Registry. The notary keeps the original
while the certified copy is filed at the Registry. Be-
PROPERTY TAX
fore applying for registration, filing vouchers for the
In Puerto Rico real property is subject to an annual Property Registry must be bought. Internal revenue
real property tax. Real property taxes are computed stamps and vouchers are acquired electronically by
based on property values that date back to the fiscal lawyers and notaries.
year 1957-1958 (which was the last time a general
appraisal was conducted by the Government of
Puerto Rico). The assessment is made as of January ATTORNEY’S FEES
1 of each year by the Municipal Revenue Collection Although not mandatory, it is highly advisable for
Center (“CRIM” for its Spanish acronym) by dis- foreign buyers to hire a lawyer. Attorney’s fees my
counting the current fair market value (FMV) of the vary depending on location and the complexity of
property to the 1957-1998 values. The rates, ranging the transaction.

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