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Act 60 · Puerto Rico Incentives Code

Why Act 60 is driving
luxury demand in PR.

For high-income earners and investors, Puerto Rico's tax incentive program offers transformative potential savings — and it's fueling a sustained wave of relocators into PR luxury real estate.

Not tax or legal advice. The following is for general informational purposes only. Act 60 eligibility, applicable rates, and annual obligations vary by individual circumstances, decree terms, and IRS compliance requirements. The IRS has an active audit campaign targeting Act 60 claimants. Consult a qualified Puerto Rico tax attorney before making any tax, residency, or investment decisions.
Potential Benefits

Key incentives for qualifying bona fide PR residents

With a valid Act 60 decree. Individual results depend on specific circumstances, sourcing rules, and IRS compliance.

0%
Capital Gains
On assets acquired after establishing PR bona fide residency. Pre-move gains taxed separately under U.S. federal rules.
0%
Dividends
PR-sourced dividends exempt from local income tax for qualifying decree holders. Federal treatment varies by source rules.
4%
Export Services
Qualifying export service businesses. 2% introductory rate for first 5 years if under $3M annual revenue.
183
Days Required
Physical presence in PR per taxable year. IRS audits actively examine compliance. Maintain detailed travel logs.
IRS Scrutiny — Active Audit Campaign: The 2024 Gajwani case and Chief Counsel Memo 202538025 confirm that residency must be substantive. Non-compliance penalties can reach 25% of unpaid taxes plus interest. Work with qualified Puerto Rico tax counsel — not just a general CPA.
Estimate your potential annual savings

Select your home state:

Estimated state tax savings vs. New York
$0
Illustrative estimate · state income tax only · not tax advice

This calculator estimates potential state income tax savings only. It does not account for federal taxes, NIIT, AMT, pre-move vs. post-move gain treatment, or individual circumstances. Consult a qualified PR tax attorney.

The 3 IRS Tests

What the IRS looks for

All three tests must be met to qualify as a bona fide Puerto Rico resident for federal tax purposes.

01
Presence Test

183+ days physically in Puerto Rico per taxable year. The IRS scrutinizes this closely — keep detailed travel logs, flight records, and credit card statements showing PR activity.

02
Tax Home Test

Your primary place of business must be Puerto Rico. You cannot maintain a U.S. tax home. Remote workers must ensure contracts and business activities are anchored to PR.

03
Closer Connection Test

Family ties, bank accounts, driver's license, social memberships, and community involvement must be stronger in PR than any U.S. state. The IRS looks at the full picture.

Annual Obligations

What's required to maintain your decree

Act 60 is a contract with the PR government — maintaining it requires ongoing compliance.

Purchase PR property as primary residenceRequired within 2 years of receiving your decree. This is where mofongo.ai directly applies.
183+ days physically in Puerto RicoEvery calendar year. Not rolling average — each taxable year must meet the threshold independently.
$10,000/yr to Puerto Rico nonprofitsAt least half must go to organizations focused on child poverty alleviation. Due annually.
$5,000/yr annual report filing feeFiled with the Puerto Rico Industrial Development Company (PRIDCO). Required to maintain your active decree.
Act 60 requires PR property purchase within 2 years.

Browse luxury buildings on mofongo.ai and connect directly with owners — before a unit ever lists publicly.

Official Act 60 PDF
Your email is never shared. Used only to notify you of a match.

Your unit details are never shown publicly.