Law 182 vs. The Original Tax Incentives Code: For Puerto Rico Luxury Real Estate Investors

Puerto Rico’s luxury real estate market is experiencing a significant evolution, driven by two landmark tax incentive programs: Act 60 and the newly introduced Law 182-2024. These frameworks offer compelling financial advantages that are attracting high-net-worth individuals and institutional developers to the island. Together, they are reshaping investment priorities, unlocking new locations, and elevating Puerto Rico's position as a premier destination for strategic luxury investment.

This guide examines the differences between Act 60 and Law 182-2024, their areas of overlap, and their implications for real estate investors seeking both tax efficiency and long-term value. From urban revitalization to personal wealth preservation, it outlines the key incentives, eligibility criteria, and deadlines shaping today’s market opportunities.

Key Takeaways

• Act 60 offers unmatched tax benefits for high-net-worth individuals relocating to Puerto Rico.
• Law 182 incentivizes large-scale urban luxury development through property, municipal, and construction tax exemptions.
• Both laws support Puerto Rico’s goal of diversifying its luxury real estate portfolio beyond beachfront areas.
• Application deadlines for both frameworks create a time-sensitive opportunity for maximizing returns.

Act 60: Residency-Based Wealth Preservation

Act 60, known as the Puerto Rico Incentives Code, consolidates over 50 previous laws into a single structure and remains highly appealing for individual luxury real estate investors. It is particularly known for its appeal to U.S. citizens who establish bona fide residency in Puerto Rico, allowing them to access significant tax breaks while contributing to the local economy.

Key Benefits for High-Net-Worth Individuals

• 0% Capital Gains Tax on appreciation accrued post-residency. This provision has drawn significant attention from crypto investors, stock traders, and other individuals with significant unrealized gains.

• 0% Tax on Dividend and Interest Income, encouraging portfolio and rental investment in Puerto Rico properties.

• 4% Fixed Corporate Tax Rate for eligible service businesses established on the island. Service industries, such as consulting, financial advisory services, and legal services, often qualify under these terms.

• Eligibility Requirements: Bona fide residency, purchase of local property, and annual charitable donations.

• Time-Sensitive Updates: Starting in 2026, a new 4% tax will be applied to capital gains, dividends, and interest, making pre-2026 applications critical. This change creates a strong incentive for investors to act swiftly.

Act 60 has positioned Puerto Rico not only as a tax shelter but also as a destination for lifestyle migration. For high-net-worth individuals, this means enjoying both financial freedom and tropical living in one strategic move.

Law 182-2024: Revitalizing Urban Luxury Development

Passed in 2024, Law 182 targets high-end urban development, shifting luxury investment from coastal enclaves to culturally rich city centers. It offers a robust suite of tax incentives for developers:

• 4% Flat Tax Rate on income from sale or lease of qualifying projects.

• 100% Tax Exemption on Dividends from project-derived income.

• 75% Property Tax Exemption on both real and personal property.

• 50% Exemption on Municipal and Construction Taxes.

• 40% Transferable Tax Credit for eligible construction and development expenses.

This legal framework not only incentivizes capital flow into Puerto Rico's historic districts but also aligns with broader urban renewal strategies. Mixed-use, walkable, and sustainable luxury developments are being prioritized to create a new wave of real estate offerings.

Urban-Centric Eligibility Criteria

Projects must be located in designated urban centers, meet a $1M minimum investment (excluding land), and include at least seven residential units. This means developers need to think beyond individual luxury homes and aim for multifamily or mixed-use urban complexes.

Comparative Matrix: Act 60 vs. Law 182-2024

Before diving into specific incentives, here’s a side-by-side comparison of Act 60 and Law 182-2024 to help investors and developers quickly identify which framework aligns best with their objectives.

Investment Opportunities Under Law 182

Law 182 opens the door to a new class of investment opportunities by significantly reducing costs and enhancing profitability for luxury urban developments in Puerto Rico.

Financial Advantages

Law 182 significantly enhances financial viability for large-scale luxury projects:

• Fixed 4% tax rate vs. standard rates of up to 37.5%.

• 75% property tax exemption and 50% municipal tax relief dramatically reduce long-term operational costs.

• 40% transferable tax credits can be sold or reinvested, adding liquidity and access to capital for developers.

These financial levers enhance project ROI, making urban luxury investments more attractive to both local and foreign entities.

Urban Market Shift

Puerto Rico's luxury market is expanding inland as Law 182 incentives promote high-end development in urban cores:

• Target areas include Old San Juan, Ponce, and Mayagüez.

• Developers are repurposing abandoned buildings into boutique hotels and luxury condos, preserving architectural heritage.

• The law drives larger developments, helping meet demand for upscale urban inventory, particularly from remote workers and global citizens seeking unique, historic experiences.

Strategic Benefits

• Deadline-Driven Execution: The December 31, 2025, application deadline promotes faster deal flow and project commencement.

• Sustainability & Smart Features: Cost savings enable enhanced finishes, innovative technology, and concierge amenities that appeal to modern buyers.

• International Appeal: Puerto Rico’s political stability and U.S. dollar-based economy combined with Law 182’s tax structures appeal to foreign investors seeking reliable diversification strategies.

Risk Considerations

• Projects must be located in designated urban zones, which limits flexibility in site selection.

• Smaller developers may face barriers due to the 7-unit minimum, which could potentially reduce diversity in development size and style.

• The competitive edge may consolidate among firms with deeper pockets or pre-existing land portfolios, potentially crowding out smaller players.

What This Means for Luxury Real Estate Stakeholders

For Individual Investors: Act 60 continues to provide a wealth preservation framework with exceptional tax incentives for relocating high-net-worth individuals. The 0% capital gains and passive income tax benefits remain unmatched. It's ideal for those seeking to reduce federal tax liability while enjoying a premium lifestyle in a tropical setting.

For Developers and Institutions: Law 182 unlocks new urban opportunities. Its focus on mixed-use, multifamily luxury projects and generous construction-related incentives makes it a game-changer for revitalizing Puerto Rico’s historic city centers. By merging profitability with purpose-driven development, Law 182 creates a model for socially responsible luxury investment.

For the Market as a Whole: Together, these laws fuel a dual-path growth strategy: residential relocation under Act 60 and urban expansion under Law 182. The combination is reshaping Puerto Rico into a holistic wealth destination, not just a tax haven. This synergy strengthens both lifestyle appeal and financial outcomes, bolstering the long-term trajectory of Puerto Rico’s luxury real estate sector.

Luxury Properties for Sale in Puerto Rico

As tax incentives under Act 60 and Law 182 reshape the investment landscape, demand for strategically located, high-end residences has surged, making now a prime time to explore luxury properties for sale in Puerto Rico. At Christie’s International Real Estate Puerto Rico, we align with the same vision these laws support: fostering sustainable, profitable, and exclusive real estate opportunities that deliver long-term value. Our curated portfolio reflects this mission, offering buyers access to some of the island’s most exceptional homes that strike a balance between privacy, prestige, and investment potential.

2 ALMENDRO, SAN JUAN, PR 00913

This rare oceanfront gem on nearly a quarter acre offers 140+ ft of waterfrontage, income potential, and unmatched views—an iconic piece of Puerto Rico real estate.

7 MANUEL RODRIGUEZ SERRA Unit: 7, SAN JUAN, PR 00907

Experience elevated beachfront living in this 3,170 sq ft furnished Condado condo, offering luxury, ocean views, and top-tier convenience in Puerto Rico.

SUNRISE PALMAS DEL MAR J2, HUMACAO, PR 00791

This spacious two-story home offers stunning views, 4 bedrooms, 2.5 baths, a walk-in pantry, patio with fruit trees, and move-in-ready Puerto Rico real estate.

Conclusion

The dual-force of Act 60 and Law 182-2024 is redefining Puerto Rico’s luxury real estate landscape, offering powerful, tailored incentives for both individual investors and urban developers. While Act 60 cements the island as a strategic haven for wealth preservation and relocation, Law 182 unlocks untapped potential in historic city centers, promoting inclusive, large-scale, and high-yield development. Together, they create a sophisticated investment ecosystem where tax strategy, cultural richness, and long-term growth converge.

At Christie’s International Real Estate Puerto Rico, we specialize in guiding luxury investors and developers through the unique advantages of Act 60 and Law 182. Our team understands the intricacies of these incentives and how they impact high-end properties across the island. If you’re looking to buy, sell, or rent out a property in Puerto Rico, we’re here to help you navigate your next move with confidence and precision.

FAQs

What is the difference between Act 60 and Law 182-2024?

Act 60 focuses on individual residency-based tax incentives, while Law 182-2024 is geared toward urban development through developer-focused exemptions and credits. Each offers distinct advantages depending on your investment strategy.

Who are these laws designed to benefit?

These laws serve a range of stakeholders but are especially favorable for Luxury Real Estate Investors looking to optimize tax strategy and long-term returns through relocation or development.

How are these incentives shaping the broader market?

By shifting focus beyond beachfront areas to include designated city zones, both laws are reshaping the Puerto Rico Real Estate landscape and expanding luxury opportunities inland.

What opportunities exist for urban developers under Law 182?

Law 182-2024 makes it more feasible to develop Puerto Rico Luxury Real Estate by reducing income, property, and construction-related taxes—especially for projects in revitalized city centers.

Can Act 60 still benefit individual buyers?

Absolutely. Act 60 continues to attract buyers of Puerto Rico Luxury Homes, offering 0% capital gains tax and passive income tax exemptions for those who establish bona fide residency.