If you are a U.S. citizen and have been thinking about relocating to Puerto Rico, then you should know about the tax incentives offered by Act 22. This act was passed in 2012 and offered some major advantages to those who relocate to Puerto Rico. In this post, we will discuss the benefits of Act 22 and how it can help you save money on your taxes!
What is Act 22 in Puerto Rico, and what are the tax incentives offered to qualifying individuals?
– Act 22 is a law that was passed by the Puerto Rican government in 2012. This act offers individuals who relocate to Puerto Rico and meet certain criteria a tax exemption on all capital gains earned after establishing residency for at least 183 days per year or more. Additionally, these individuals will have their federal income taxes reduced from 35% down to zero per cent!
– Eligibility requirements include: being over 18 years old with no criminal record; having lived outside of Puerto Rico for at least 15 consecutive years before moving back permanently as well as meeting other conditions depending on your individual circumstances (e.g. if you own property here). If you do not qualify under the rules above but still want some relief from high US taxes, other options are available, such as becoming a resident alien or establishing residency in another country with lower taxes than what would otherwise apply under US law.
– The tax benefits are only applicable for capital gains earned after relocating to Puerto Rico and meeting the eligibility requirements above; income from sources outside of Puerto Rico is not eligible for these incentives.
Before we get into any of that, it’s important to know what exactly Act 22 is. This act was passed in 2012 and offers some major advantages to those who relocate Puerto Rico before December 31st, 2035 (or 30 years after the passage). These incentives include no federal income tax on interest earned from assets held within an offshore bank account or investment portfolio while living outside of the United States; 100% exemption for qualified investors with more than $500k invested over twelve months; capital gains tax rate reductions up to 90%. The goal of this legislation is twofold: firstly, attract foreign investments and secondly, encourage entrepreneurship among native residents by giving them access to capital without having their earnings taxed as heavily at home. So how does this all play out in practice?
For example, a U.S. citizen relocates to Puerto Rico and buys a home for $500,000. Under Act 22, they would not have to pay any federal income tax on the interest earned from the mortgage payments on that home. Furthermore, if they sell the property after holding it for five years, they will only have to pay a capital gains tax of just 14%, as opposed to the standard rate of 23.eight%. That’s a huge saving! And these are just some examples – there are plenty of other benefits available under Act 22. So if you have been thinking about relocating to Puerto Rico, now is definitely the time to do so! Contact an expert today for more information on Act 22 and how it can help you save money on your taxes.
If you are a U.S. citizen, have been thinking about relocating to Puerto Rico, and want to take advantage of the tax incentives offered by Act 22, then contact an expert today! They can provide you with more information on this legislation and how it can help you save money on your taxes. With these benefits available, now is definitely the time to make a move!