Save Your Money From Inflation by Moving to Puerto Rico
- Posted: June 16, 2022
- Posted by: Travis Lynk
- Last Reviewed: June 16, 2022
If you’ve filled your gas tank, shopped for groceries, or paid the rent lately, you’ve probably wondered why every bill seems to be going up so fast. The answer: inflation.
Inflation means average prices for everyday goods and services are rising and purchasing power is declining over time. Each dollar becomes worth less. Between March 2021 and March 2022, these prices rose by around 8.5% overall. That’s a sharper increase than at any other time in the previous four decades. This happened for a variety of reasons, many of them related to the COVID-19 pandemic. The latest bout of inflation has hit especially hard because consumer demand for goods and services has increased even as the supply of these has decreased. Many financial experts say high inflation levels probably aren’t going anywhere soon.
Luckily, from revamping your household budget to your emergency fund, there are plenty of things you can do to offset the effects of high inflation and preserve your hard-earned wealth. Let PRelocate do even more to save you money, lower your federal and state taxes, and compound your gains by helping you to establish residency in Puerto Rico. The overall low cost of living relative to the mainland and the unparalleled tax benefits described below will go a long way in taking the sting out of surging inflation.
In 2012, Puerto Rico passed two pieces of legislation—Act 20 and Act 22—that were later updated and are now known together as Act 60. Act 60 provides special benefits for eligible individual investors as well as businesses on the island that receive income from customers off the island. Thanks to these generous incentives, thousands of Americans have already saved a fortune by moving to Puerto Rico.
How exactly have they benefited under Act 60? The federal government does not tax residents of this U.S. territory (Puerto Rico’s government does, though). Furthermore, qualified individual investors who relocate to the island can enjoy a 100% exemption from Puerto Rico income taxes on all cryptocurrency assets, dividends, interest, and short-term and long-term capital gains. For selected businesses, there’s an exceptionally low 4% corporate tax. Contrast that with the regular 21% corporate tax rate on the mainland! Qualified businesses aren’t taxed on distributions from earnings and profits either and enjoy reduced state and municipal taxes. Depending on your profession, you might benefit from even more tax incentives upon relocating. Thanks to Act 60, it won’t matter as much that inflation is eroding the value of each dollar. You’ll be keeping more of those dollars to save or spend as you wish.
To be eligible for such low taxes, you must meet a series of requirements to become a bona fide resident of Puerto Rico. One of these involves purchasing real estate there within two years of obtaining this special tax decree. The property must remain your primary residence for as long as the decree remains in force. Fortunately, you can choose from a vast selection of high-quality housing on the island.
Considerations such as location, funding, how to search for a property, and closing the transaction are important, so keep these tips for buying a home in Puerto Rico in mind. Be sure to educate yourself on potential pitfalls associated with buying real estate so everything goes as smoothly as possible. Odds are, the sooner you start planning and acting, the better the deal you’ll get. Real estate has been booming. It’s easy to see why when the island has so much to offer in terms of luxury, security, and comfort.
The PRelocate team is standing by to answer your questions and provide you with top-notch support. We are a licensed real estate brokerage firm with in-depth expertise on housing in Puerto Rico. Contact us today to save time, money, and effort as you prepare for your incredible new life in the Caribbean.
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.