Puerto Rico Capital Gains Tax

Capital gains taxes.

Puerto rico capital gains tax.

A nonresident company not engaged in a trade or business in puerto rico is generally taxed at a flat rate of 29 withheld on puerto rican sourced profits and income including investment income rental income and capital gains. All capital gains earned after moving to the island are tax free but you ll have to pay taxes on gains made before moving which makes puerto rico an interesting option for eyeing retirement and potentially especially for those considering early retirement. I routinely get calls from entrepreneurs about to exit who ve bought their ticket to san juan. Equally compelling income earned in puerto rico is.

The island offers a corporate tax rate in the single digits and capital gains taxes at zero. Long term tax treatment will apply to those capital assets held for more than one year. However this part of puerto rico act 60 applies only to puerto rico sourced capital gains and passive income. Long term capital gains are subject.

Puerto rico act 60 0 tax on capital gains and distributions. No long term capital gains tax on appreciation after you become a resident. 5 tax on long term capital gain for appreciation before you move for any sales during your first 10 years as a resident. 5 tax on long term capital gains realized before becoming a resident of puerto rico but recognized after 10 years of becoming a resident of puerto rico as long as recognized before january 1 2036 this 5 long term capital gain tax only applies to the portion of gain that relates to the appreciation of the property while the individual lived.

In arriving at effective capital gains tax rates the global property guide makes the following assumptions. To qualify you must be a bona fide resident of puerto rico for an entire tax year. Puerto rico has a de minimis rule to avoid sourcing to puerto rico very small amounts of income from personal services. The property is directly and jointly owned by husband and wife.

Income from personal services performed within puerto rico will not be considered from puerto rican sources if it is usd 3 000 or less and the individual was present in puerto rico for 90 days or less during the calendar year. All capital gains and investment income of a puerto rican resident are taxable for puerto rican purposes. They have owned it for 10 years. Act 22 is billed as move to puerto rico and pay no tax on capital gains just like with act 20 that s sort of true but it s more complicated than that.

It is their only source of capital gains in the country.