{"id":169134,"date":"2024-03-08T10:19:42","date_gmt":"2024-03-08T17:19:42","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=169134"},"modified":"2024-03-20T10:10:11","modified_gmt":"2024-03-20T16:10:11","slug":"investing-in-puerto-rico-real-estate","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/investing-in-puerto-rico-real-estate","title":{"rendered":"Is Puerto Rico America&#8217;s Best Investing Destination? Here&#8217;s What You Need to Know"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC4619663852\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">The year-round sunshine, the convenience of direct flights, the incredible food and culture\u2014there\u2019s a lot to love about Puerto Rico. As an American citizen, all the same rules apply for buying investment property in this balmy, seaside U.S. territory as they do on the mainland.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Market Details<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to short-term rental tracking company AirDNA, it should come as no surprise that Puerto Rico is a booming and profitable&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/the-ultimate-guide-to-short-term-rental-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rental<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;market. The capital city of San Juan gets AirDNA\u2019s top score of 100, with average occupancy rates of over 60%, average nightly rates of over $200, and average annual revenue of over $45,000 (up almost 10% YOY).&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Like all Caribbean islands, Puerto Rico has a hurricane season that runs from June 1 to Nov 30, so bookings can be a little softer during August and September, dipping below 50% occupancy rates for these months. That said, during winter months, average nightly rates hover around $325, and occupancy rates bounce up closer to 70%. Investment properties here run the gamut just like any other beach location\u2014huge, multimillion-dollar single-family homes, sweet beach cottages, and condos with wide ocean views.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Snowbirding Has Big Benefits<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">But there are even more reasons to love investing in Puerto Rico if you\u2019re willing to make some bigger changes. What if you moved there? At least for part of the year? Rather than snowbirding in the usual locations of Scottsdale, Naples, or Tampa, if you elect to spend winters in Puerto Rico, you will be much, much richer for it.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This is&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investpr.org\/why-puerto-rico\/tax-benefits-policy\/?gad_source=1&amp;gclid=CjwKCAiAloavBhBOEiwAbtAJO6Of5ljkHTa_Xo7_5hLgEWbU2gDwG9-avIKBuSPKLlVv64s3yjq06xoCRvcQAvD_BwE\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">thanks to Act 60<\/span><\/a><span data-preserver-spaces=\"true\">, which creates huge financial incentives for mainlanders to move to the island. If you become an island resident, under Act 60, otherwise known as the Individual Investors Act, you benefit from:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">100% tax exemption from Puerto Rico income taxes on all dividends<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">100% tax exemption from Puerto Rico income taxes on all interest<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">100% tax exemption from Puerto Rico income taxes on all short-term and long-term capital gains<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">100% tax exemption from Puerto Rico income taxes on all cryptocurrencies and other crypto assets<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">This means a break on both local and federal taxes, since the U.S. federal government does not directly tax Puerto Rico residents, leaving that up to the local government of Puerto Rico.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">To qualify for these amazing incentives and pay zero capital gains on all your investments, whether that\u2019s real estate or stock investments, you do, however, need to actually move to the island for part of the year and purchase a home within two years of arrival.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There are three tests the IRS requires you to pass to prove this:<\/span><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">Presence test:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;There are many ways to do this, but you basically need to show that you are physically present in Puerto Rico for 183 days (six months) during the year. During 30 of those days, you can be traveling in other countries (just not the U.S.), so it\u2019s actually 153 days (five months), and there are medical and weather exceptions to this also.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Tax home test:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;Your primary or regular place of employment needs to be in Puerto Rico. If you don\u2019t have a regular place of employment (i.e. if you\u2019re a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/passive-real-estate-investing\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">passive investor<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;or retired), this defaults automatically to where you live.<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">Closer connection test:<\/span><\/strong><span data-preserver-spaces=\"true\">&nbsp;This is slightly squishy but includes things like where your permanent home is, where your cars and clothing are, where your bank is, etc.<\/span><\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Fine Print<\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Currently, Act 60 sunsets at the end of the year in 2035, after which time you\u2019ll owe taxes on any passive income.&nbsp;<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">You have to apply and pay the fees, which are around $6,000.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">You must make a $10,000 charitable contribution.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Ready to buy your plane ticket yet? Puerto Rico is win-win, a great vacation market for short-term rentals with high occupancy and nightly rates, but for the right investor, the real home run involves a moving van (or boat?). Incredible financial incentives await investors willing to call this island home.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_bac6a302c594300b470f6fcf2fb94c3f\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_d39a4a76632be9db8de262f3d6c3afd1\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_2b98fc011552573fd6d29e4016455ff9 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/investing-in-puerto-rico-real-estate&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/investing-in-puerto-rico-real-estate&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>With markets across the country cash flow-strapped and unaffordable, where do you turn? We&#8217;ve mentioned Europe, but there&#8217;s a closer destination that&#8217;s worth a look too.<\/p>\n","protected":false},"author":613680,"featured_media":169137,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7364,7119],"tags":[],"class_list":["post-169134","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-markets","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/169134","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613680"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=169134"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/169134\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/169137"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=169134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=169134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=169134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}