Verified Outcomes
Key Architectural Deliverables & Takeaways
- 0% federal & local tax rate on eligible capital gains accrued after establishing Puerto Rico bona fide residency.
- 4% fixed corporate tax rate on eligible export service revenue generated from the estate office.
- 100% property tax exemption eligibility for primary residence qualifying under approved statutory decrees.
- Clear compliance checklist for the 183-day presence test, tax home test, and closer connection test.
1. Statutory Context & Legislative Basis
Enacted under Act 60-2019, Puerto Rico provides a statutory tax framework protected under U.S. Federal Code (IRC § 933 and IRC § 937). Income derived from sources within Puerto Rico by individuals who are bona fide residents of the territory is completely excluded from U.S. federal income taxation.
Our Dream Villa is custom-engineered to fulfill all statutory requirements for an Approved Primary Residential Real Estate Investment under Act 60 Chapter 2.
2. The Three Statutory Residency Tests (IRC § 937)
[ BONA FIDE PUERTO RICO RESIDENCY ]
│
┌────────────────────────────┼────────────────────────────┐
▼ ▼ ▼
[ 183-Day Presence Test ] [ Tax Home Test ] [ Closer Connection Test ]
- In PR ≥ 183 days/yr - Principal place of - Family primary residence
- Documented travel logs regular trade/biz - Bank accounts & voting
- Passport / Boarding passes - Puerto Rico address - Vehicle registrations
3. Statutory Milestone Calendar
| Date | Statutory Filing / Action | Responsible Party | Documentation Required |
|---|---|---|---|
| January 15 | Annual Residency Log Consolidation | Resident / CPA | Flight records, credit card receipts |
| April 15 | Puerto Rico Hacienda Tax Return (Form 482) | CPA / Tax Advisor | W-2PR, Hacienda withholding statements |
| April 15 | U.S. Federal IRS Form 8898 (First & Last Year) | CPA | Statement of establishment of residence |
| May 31 | DDEC Annual Compliance Report Due | Decree Holder | Deed of real property, donation receipts |
| Year-Round | $10,000 Statutory Non-Profit Contributions | Decree Holder | Official receipts from 2 certified PR NGOs |
4. Annual Compliance Verification Checklist
- Log entry and exit dates with airline boarding passes and flight receipts into tax archive.
- Verify total presence in Puerto Rico equals or exceeds 183 calendar days for current tax year.
- Execute $10,000 statutory donation split ($5,000 to child poverty entity / $5,000 to general PR non-profit).
- Ensure Our Dream Villa title deed registered with the Property Registry of Puerto Rico.
- Obtain active Puerto Rico driver's license and register personal/family vehicles locally.
- File annual report and pay administrative fee ($5,000) through the DDEC Single Business Portal (SBP).