Miami investors face mounting pressure from rising property values and evolving tax landscapes that challenge traditional wealth management strategies. While Florida's no-income-tax status has long attracted high-net-worth individuals, Puerto Rico's Act 60 presents compelling advantages that outshine even Florida's favorable tax environment. The island's capital gains exemptions and real estate investment incentives create opportunities that savvy investors can no longer ignore.
The financial landscape for high-net-worth investors continues to shift as traditional tax havens face new regulations and increased costs.
Key Takeaways
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Act 60 can reduce Puerto Rico income tax on qualifying capital gains to 0% (with a proposed 4% on certain passive income for new applicants from 2026), while Florida residents still owe federal capital gains taxes.
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Effective property-carry costs in Puerto Rico are often lower than in Miami-Dade/Broward, improving long-term portfolio math for luxury assets.
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Act 60 eligibility hinges on bona fide residency, a PR principal residence within two years, $10k annual donations, and annual DDEC reporting—clearer benchmarks than Florida’s domicile factors.
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Aligning tax, legal, and real estate strategy (including timing, day counts, and entity structure) is essential to capture benefits and stay compliant.
Why Puerto Rico's Act 60 Beats Florida's Tax Structure
Puerto Rico vs Florida taxes reveals stark differences that favor the island territory for capital gains treatment. Act 60 provides a 100% exemption from local income taxes on interest, dividends, and capital gains for qualifying residents, whereas Florida residents still face federal capital gains taxes, which can reach 23.8% for high earners. The math becomes compelling when you consider a $10 million capital gain triggers $2.38 million in federal taxes for Florida residents but zero local taxes for Act 60 beneficiaries.
The recent 2025 updates to Act 60 maintain competitive advantages even with new changes. Current decree holders and those securing decrees before 2026 retain the full 0% capital gains rate, while future applicants face only a 4% tax on Puerto Rico-sourced passive income starting in 2026.
Capital Gains Tax Comparison
Federal capital gains rates apply differently based on your residency status and income levels. Florida residents cannot escape federal obligations, facing rates from 15% to 20% plus the 3.8% Net Investment Income Tax for high earners. Puerto Rico's Act 60 participants are exempt from these local tax burdens on qualifying income streams.
The legislature approved extending program availability through 2055; confirm final enactment and DDEC guidance before relying on it. This provides decades of tax-advantaged wealth management opportunities that Florida simply cannot match.
Property Tax Benefits
Real estate investment incentives extend beyond income tax savings to property tax advantages. Puerto Rico's property tax rates remain substantially lower than Florida's escalating assessments, particularly in high-value markets like Miami-Dade and Broward counties. Miami Beach properties face effective rates exceeding 1.5% annually, while comparable luxury properties in San Juan or Dorado often see rates below 1%.
These savings compound over time, creating significant cost advantages for real estate portfolios.
|
Tax Category |
Florida Residents |
Act 60 Beneficiaries |
|---|---|---|
|
Capital Gains (Federal) |
15-20% + 3.8% NIIT |
0% (current) / 4% (2026+) |
|
Dividend Income |
15-20% + 3.8% NIIT |
0% (current) / 4% (2026+) |
|
Interest Income |
Up to 40.8% federal |
0% (current) / 4% (2026+) |
|
Property Taxes |
1.0-1.5%+ annually |
0.5-1.0% annually |
|
Estate Tax Exposure |
Federal rates apply |
No local estate/gift tax (since 2018) |
Note:
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Bona fide PR residents exclude PR-source income from U.S. federal tax; U.S.-source income (e.g., U.S. property, certain interest) may still be subject to federal tax.
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Puerto Rico has no local estate/gift tax (since 2018); however, U.S. federal estate tax rules still apply to U.S. citizens/green card holders and U.S.-situs assets. Coordinate with counsel for cross-border estate planning.
Act 60 (Ch. 2) Residency & Compliance—What You Must Do
To unlock and keep Act 60 (Ch. 2) benefits, you must qualify as a bona fide Puerto Rico resident and meet a few ongoing decree obligations. The checklist below consolidates residency tests, timing rules, annual filings, and practical record-keeping, allowing you to operate cleanly and defensibly.
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Qualify as a bona fide PR resident under IRC §937: pass the Presence test (commonly 183+ days), maintain your Tax Home in Puerto Rico, and show a Closer Connection to Puerto Rico than to any U.S. state.
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Respect the eligibility lookback window (i.e., you were not a PR resident during the period applicable to your filing year); confirm the exact dates with DDEC/current guidance.
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Purchase a principal residence in Puerto Rico within 2 years of decree issuance and maintain it as your primary home for the life of the decree.
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Give $10,000 in annual charitable donations to PR nonprofits ($5,000 to a CECFL-listed entity and $5,000 to any qualifying PR nonprofit) and keep proof.
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File the DDEC annual report and pay required fees; retain travel logs, bills, banking, and other documents evidencing residency.
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Use day-count/recordkeeping systems (calendars, travel dossiers, mobile logs) to substantiate Presence and Closer Connection.
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Coordinate U.S./PR tax treatment (e.g., PR-source vs U.S.-source income) with cross-jurisdiction counsel.
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Monitor legislative status (e.g., proposals on availability through 2055 and 2026 rules for certain passive income) and verify before relying.
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Engage local professionals (tax, legal, real estate) to maintain compliance and align property strategy with decree obligations.
Real Estate Investment Opportunities Under Act 60
Puerto Rico's luxury real estate market presents compelling investment opportunities that align perfectly with Act 60 requirements, offering portfolio diversification beyond traditional Florida markets. Recent success stories highlight how high-profile investors are relocating to capitalize on these benefits. The island's beachfront properties, historic estates, and new construction developments offer options to suit every investment strategy, meeting program investment thresholds. Condado, Dorado, and Old San Juan represent established luxury markets with strong appreciation potential and rental income opportunities.
The combination of tax incentives and real estate investment creates synergistic benefits that compound over time. Property appreciation gains qualify for favorable tax treatment, while rental income from luxury properties generates additional tax-advantaged revenue streams.
Market Performance and Trends
Puerto Rico's luxury real estate market has demonstrated resilience and growth that rivals Florida's performance in key metrics. Average luxury home prices in premium areas, such as Dorado, have appreciated consistently, while inventory levels remain manageable compared to oversupplied Florida markets. The island's limited land availability in prime locations creates natural scarcity that supports long-term value appreciation.
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Beachfront properties in Condado typically range from $800 to $1,500 per square foot.
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Dorado luxury estates range from $2 million to $15 million, with strong rental potential.
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Old San Juan's historic properties offer unique investment opportunities with significant cultural value.
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New construction developments provide modern amenities with tax-advantaged ownership structures.
Financing and Acquisition Strategies
Acquiring Puerto Rico real estate as an Act 60 participant involves unique considerations that differ from typical Florida transactions. Local banking relationships, title insurance, and legal structures require specialized knowledge to optimize tax benefits and ensure compliance. Many investors structure purchases through Puerto Rico entities to maximize incentives while maintaining operational flexibility.
Professional guidance becomes crucial for navigating local regulations, zoning requirements, and financing options that support Act 60 objectives.
The wealth management implications extend beyond immediate tax savings to long-term estate planning advantages.
Wealth & Transition Plan (Step-by-Step)
Act 60 can compound wealth over decades by reducing tax drag, supporting estate planning, and adding geographic diversification—benefits that Florida residency can’t match. Coordinate cross-jurisdictional treatment (PR vs. U.S. federal) so that capital gains, dividends, and estate exposure are optimized under your decree terms.
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Run a comparative tax model (current vs PR scenarios, multi-year).
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Assemble advisors (PR/U.S. tax, legal, real estate).
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Map a residency timeline (decree filing, 183-day plan, documentation).
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Secure a primary residence in Puerto Rico and plan day-count tracking.
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Restructure holdings (entity, banking, and asset location for source rules).
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Line up operations & lifestyle (property search, schools/healthcare, providers).
Puerto Rico vs. Florida—Investor Snapshot
Below is a bite-sized matrix summarizing the major differences you surfaced for high-net-worth real estate investors.
|
Dimension |
Puerto Rico (Act 60, Ch. 2) |
Florida Resident |
Why it matters |
|
Capital gains |
PR income-tax exemption on qualifying gains for bona fide residents; proposals keep 0% for current/pre-2026 decrees; post-2026 may see 4% on certain passive income (verify). |
Federal capital gains 15–20% + 3.8% NIIT for high earners. |
Large exits face far less tax drag under PR rules. |
|
Dividends |
Exempt from PR income tax for decree holders (verify treatment post-2026 proposals). |
Federal dividend rates 15–20% + NIIT for high earners. |
Improves yield on income portfolios. |
|
Interest |
Exempt from PR income tax for decree holders (verify post-2026 4% scope). |
Taxed at federal ordinary rates; NIIT may apply. |
Enhances fixed-income after-tax returns. |
|
Property taxes |
Often 0.5–1.0% effective in luxury areas (mechanics vary). |
Commonly 1.0–1.5%+ in Miami-Dade/Broward. |
Lowers annual carry, boosting IRR. |
|
Residency rules |
Objective tests (Presence, Tax Home, Closer Connection), PR home within 2 years, $10k donations, DDEC annual report. |
Subjective domicile factors (intent evidence like voter reg, bills, etc.). |
PR rules are more checklist-driven for planning and audits. |
|
Program horizon |
Legislative path indicates availability through 2055; confirm final enactment/DDEC guidance. |
No comparable program. |
Supports multi-decade planning. |
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Estate/gift (local) |
No local estate/gift tax (since 2018); federal rules still apply for U.S. citizens and U.S.-situs assets. |
Federal estate/gift tax applies. |
Plan cross-border estates with counsel. |
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Compliance |
Day-count tracking + annual DDEC filings and donation evidence. |
Maintain domicile evidence as needed. |
Clear PR documentation reduces ambiguity. |
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Market dynamics |
Scarcity in prime areas (Dorado, Condado, Old San Juan); strong luxury demand and rental potential. |
Deeper, sometimes more volatile supply in FL hubs. |
Supports appreciation and rental strategies. |
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Financing/structuring |
Local banks, title, and PR entities commonly used to optimize benefits. |
Standard U.S. mainland lending/entity playbooks. |
Structure impacts source rules and outcomes. |
Note: Verify proposed 2026+ changes and the 2055 availability extension with current legislation and DDEC guidance before relying on them. Coordinate U.S./PR sourcing and estate implications with qualified tax counsel.
Luxury Properties for Sale in Puerto Rico
Christie's International Real Estate Puerto Rico specializes in connecting discerning investors with exceptional luxury properties for sale that align with Act 60 investment requirements and lifestyle preferences. Our portfolio spans the island's most prestigious locations, from beachfront estates to historic mansions, each offering unique opportunities for tax-advantaged real estate investment. We understand the intersection of luxury living and strategic tax planning that makes Puerto Rico an increasingly attractive destination for sophisticated investors.
2 ALMENDRO, SAN JUAN, PR 00913
This exceptional Condado property offers modern luxury with beachfront proximity and investment potential that satisfies Act 60 requirements.
State Highway #2, KM 83.1 BO. CARRIZALES, HATILLO, PR 00659
Expansive mountain estate providing privacy and development opportunities with panoramic views and substantial acreage for discerning buyers.
Emerald Lake Plantation UVILLO ST #E9, TRUJILLO ALTO, PR 00976
Elegant lakefront residence in prestigious Trujillo Alto community featuring resort-style amenities and sophisticated architectural design.
Carr. 414 KM 11.3, AGUADA, PR 00602
Spectacular oceanfront property offering pristine beaches, development potential, and unparalleled privacy for creating a luxury estate.
Strategic Advantage for Forward-Thinking Investors
Puerto Rico’s Act 60 is more than a tax incentive—it’s a transformative opportunity for Miami investors seeking wealth preservation, tax-advantaged living, and access to thriving Puerto Rico luxury real estate markets. With benefits that may extend through 2055, investors can secure long-term financial certainty while enjoying a Caribbean lifestyle unmatched by Florida. For those seeking to maximize capital gains exemptions, reduce property taxes, and diversify their portfolios, Puerto Rico offers a strategic and lifestyle-driven investment destination.
At Christie’s International Real Estate Puerto Rico, we specialize in helping clients navigate Act 60 opportunities through exceptional Puerto Rico luxury real estate. Whether you are looking to buy, sell, or rent, we are committed to guiding you with trusted expertise and access to the island’s luxury properties. Connect with us today to take the next step toward tax-advantaged living and securing your place in Puerto Rico’s most exclusive communities.
FAQs
What is Act 60, and how does it benefit investors compared to Florida's tax system?
Act 60, also known as the Incentives Code, offers substantial tax benefits to investors in Puerto Rico, including a 100% exemption from local capital gains, interest, and dividend taxes. In contrast, Florida residents are subject to federal capital gains taxes as high as 23.8%. This makes Puerto Rico an attractive alternative for high-net-worth individuals looking to optimize their tax exposure and investment returns.
What are the residency requirements for Act 60 participants?
To qualify for Act 60 benefits, applicants must not have been residents of Puerto Rico for the previous six years and must spend at least 183 days per year on the island. They also need to make qualifying investments in local businesses or real estate. These straightforward criteria differ from Florida's more complex domicile requirements, making it easier for investors to establish residency and claim tax incentives.
How does Puerto Rico's property tax structure compare to Florida's?
Puerto Rico offers significantly lower property tax rates than Florida, with averages often below 1%, compared to Florida's rates, which can exceed 1.5% in high-value markets like Miami. This reduction in property taxes, combined with the capital gains exemptions under Act 60, enhances the overall financial appeal of investing in Puerto Rican real estate.
