Our mission is to help individuals and businesses minimize the time and cost of moving to Puerto Rico, from when they first consider the idea to when they relocate. While owning real estate in Puerto Rico can be rewarding, the process is quite different from on the mainland, and there are certain considerations you should make before purchasing a Puerto Rican property. Here is a convenient list of tips we have developed. If you are interested in buying or renting a property please click here so we can help you find a place that fits your needs. If you are interested in selling a property, click here.
The Act 60 Real Estate Requirement
A huge driver behind the immigration of many high-net-worth U.S. individuals to the island is the Act 60 tax incentives, particularly Act 60 Export Services and Individual Resident Investor, the former offering a 4% corporate tax rate to businesses rendering Puerto Rico–based services to overseas clients and the latter promising a 100% exemption on corporate gains taxes. Similar incentives have been in place since 2012, but under a different name. In 2020, they were collectively replaced by Act 60, which introduced the new requirement to purchase Puerto Rican property within the first two years of obtaining the tax decree.
The regulation further stipulates that the purchased property must act as the purchaser’s primary property for the duration of the decree’s validity, which suggests that it cannot be rented out. A further requirement of the act—and one that existed prior to the switch to Act 60—is that a beneficiary be a bona fide resident of Puerto Rico, which in part entails spending a significant portion of time in Puerto Rico. Thus, for Act 60 decree holders, buying a home is not only a good idea but a requirement.
Where to Buy Puerto Rican Property
When looking to buy property in Puerto Rico, the first question to ask is where it should be. San Juan is one of the most popular real estate markets in Puerto Rico, with affluent neighborhoods like Bayamon, Isla Verde, Condado, Miramar, and Old San Juan. Outside of San Juan, areas like Dorado, Palmas del Mar, and Rincón are safe, secure, and highly sought after by American expats. No matter where you intend to purchase, careful research is paramount to ensure you wind up in a desirable neighborhood.
The downside, of course, is that while the average price of houses in Puerto Rico is low, prices in more desirable neighborhoods—especially luxury areas like Dorado—are typically much higher and expected to only grow in the near future. In most desirable neighborhoods, homes go for $600,000 to $1.2 million, with Dorado properties rarely selling for less than a million. San Juan tends to be more expensive as well, but you don’t have to go far outside the city to find lower real estate prices.
How to Buy a Property in Puerto Rico
Where to Find Listings
If you’re expecting a process like in the mainland US, think again. The process of buying property in Puerto Rico is quite a bit different from in the mainland, and if you’re not careful, you could end up ripped off or stuck in a contract with less-than-favorable terms.
The first step is to find listings, and even that is complicated. Puerto Rico doesn’t have a Multiple Listing Service (MLS) like in the US, so you’ll have to consult various sources throughout your house-hunting. In Puerto Rico, listings are generally controlled by local realtors, making the compilation of listings on a centralized website complicated.
The most comprehensive resource is Clasificados Online, which is entirely in Spanish and looks like it time-traveled right out of the 90s. Despite appearances, it is generally the most up-to-date and comprehensive resource for real estate listings. Nonetheless, you may find listings with no data, wrong data, or outdated data.
Zillow is a useful alternative, offering much more reliable information, but its coverage is poor, showing only a fraction of the available properties on the island. Point2 is another good resource, with high usability and good coverage of certain pockets, but listings may be outdated, and like Zillow, many available properties are not listed on the site.
Finally, prospective buyers can also consult a real estate agent’s individual website to find listings. Agent sites tend to offer the most accurate information, but finding the sites themselves can be a challenge. Working with real estate agents in Puerto Rico is also, incidentally, a challenge.
How to Work with Real Estate Agents
With listings controlled by different individual realtors, “territories” have popped up, and agents generally only show listings from their own territories. If the agent you’re working with has exhausted all their listings, you’ll have to work with another agent to see more properties. Generally, this translates into buyers liaising with five or six agents to find a single property. Firms like PRelocate help by streamlining the process and reducing the bureaucratic obligations of the prospective homebuyer.
Beware, too, of unofficial agents in Puerto Rico. The process of becoming a certified real estate agent on the island is complex, with heavy restrictions and no shortage of bureaucracy, which leaves only around one quarter of agents actually officially qualified. Most unofficial realtors aren’t scammers—though a few are—but they may draft poorly worded contracts or do unsettling things such as using their own bank account for escrow.
How to Negotiate Terms and Write Up a Contract
In the mainland US, homebuyers are accustomed to making offers in writing, but in Puerto Rico, negotiations are conducted verbally. Brokers work with their own individual standard contracts rather than industry standards like in the US, so terms and conditions may need to be significantly negotiated, especially if the broker’s fiduciary duty is to the seller and not you, as in the case of listing agents.
Once you agree verbally on the terms, the broker will write up the contract and send it. Read it carefully because if the broker isn’t representing you, the contract isn’t likely to be favorable, even if you’ve already agreed on the terms. It’s highly advisable to hire a lawyer to protect your interests—before you sign off on the contract, have your attorney look it over. A lawyer’s assistance can save you untold amounts of money, time, and stress and is invaluable for those unfamiliar with Puerto Rican law themselves.
Putting forth a predetermined purchase agreement template can save a Puerto Rico homebuyer time, effort, and headaches. PRelocate, whose team is familiar with the homebuying process in Puerto Rico and the challenges it poses to U.S. homebuyers, has drafted an easy-to-use purchase agreement template that a homebuyer can easily customize for their own situation. Composing an escrow agreement is also advised to protect one’s financial assets, and PRelocate has provided a fully customizable escrow agreement template as well.
Obtaining a Mortgage
Securing a mortgage in Puerto Rico can be a difficult and lengthy process, so it’s advised to buy in cash, if possible. Some buyers obtain a home-equity loan on their U.S. home and move the cash to Puerto Rico to buy their Puerto Rican property. An alternative option is to initially rent while you undertake the process for loan approval. Be aware that lending rates are generally higher in Puerto Rico than the mainland.
Willing Your Property
A final consideration for prospective homebuyers in Puerto Rico is the forced heirship law that requires properties to be passed to blood relatives upon the owner’s death. This means that if you own a Puerto Rican property, it will automatically go to your blood family and not your spouse. Children are first in line, with grandchildren following. The property goes to the parents if the owner has no children or grandchildren.
If you will your property to your spouse or others not stipulated under Puerto Rico’s forced heirship law, the property will be divided into thirds and distributed thusly. One-third will go to your children, one-third to other blood relatives named in your will, and the final one-third to your spouse or other non-blood heirs listed in your will. If you have no children, the property will be split in half between the forced heirs—the parents or other blood relatives—and anyone of the testator’s choosing. This makes inheritance a complicated and lengthy process even when there’s a will and no disputes among beneficiaries.
PRelocate’s Real Estate Brokerage Services
If you’re looking to purchase, rent, or sell real estate in Puerto Rico, PRelocate can help. We’re a licensed real estate brokerage firm (license C-21696) with experience and extensive knowledge of the Puerto Rico real estate market. Our team is professional, responsive, friendly, and experienced, and with both native English- and Spanish-speaking staff, we can help you break down any language barriers you might encounter. We can save you time and effort by helping you find the right Puerto Rico property for you quickly and easily. In the meantime, you can view current real estate rental and for sale listings.
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Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together “PRelocate”) are law firms, and this is not legal advice. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Rico’s tax incentives, maintaining bona fide residence in Puerto Rico, and any other issues related to taxes or residency in Puerto Rico. PRelocate does not assume any responsibility for the contents of, or the consequences of using, any version of any real estate or other document templates or any spreadsheets found on our website (together, the “Materials”). Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction.