Act 60 Puerto Rico 2027 Changes: A Guide for U.S. Buyers
Updated September 18, 2026
Puerto Rico’s Act 60 tax incentive is changing. Under Act 38-2026, anyone who files for the Resident Individual Investor decree on or after January 1, 2027 will pay a fixed 4% Puerto Rico tax on investment income instead of 0%, in exchange for a program that runs until 2055. If you are a U.S. buyer weighing a move to Puerto Rico, here is what changed, who actually qualifies and what it means for the home you buy.
Key takeaways • File by December 31, 2026 to keep the 0% rate on interest, dividends and post-move capital gains (valid through 2035). • File on or after January 1, 2027 and you pay a fixed 4%, but benefits last until December 31, 2055. • Your regime is set by the date you file the application, not the date you move or the date it is approved. • Act 60 applies only if you move your residence to Puerto Rico. A vacation home or rental property does not qualify. • Decree holders must buy a principal residence in Puerto Rico within two years, in their own name, from an unrelated seller. • The decree covers Puerto Rico taxes only. The IRS applies its own residency rules. |
What Is Act 60 and What Changed?
In 2012, Puerto Rico made an unusual bet. It offered high-net-worth individuals a near-total exemption from local taxes on their investment income in exchange for moving their residence and their capital to the island.
That bet was written into two laws that year: Act 20 and Act 22. In 2019, the Legislative Assembly consolidated them, along with more than a dozen other incentives, into Act 60, known as the Puerto Rico Incentives Code.
Act 60 covers many sectors, but the part that matters to someone considering a move is Chapter 2: the Resident Individual Investor decree. That decree works as a contract between the beneficiary and the Government of Puerto Rico.
Has Act 60 worked?
It depends on what you measure. Between 2012 and 2024, Puerto Rico granted 5,852 resident investor decrees, with a peak in 2021 as remote work became widespread (GAO-26-107225, p. 12).
Being granted a decree is not the same as using it, though. In 2023, fewer than 3,000 people were claiming the benefit, less than 0.1% of the island’s population.
The U.S. Government Accountability Office (GAO) reviewed the program in December 2025 and found the evidence mixed. The economic effect is hard to isolate, partly because beneficiaries are such a small share of the population.
Several studies commissioned by the local government point to increased economic activity and employment. At the same time, mayors and community organizations told the GAO they were concerned about rising rents and the purchase of entire buildings for short-term rentals.
The amendment: Act 38-2026
On March 10, 2026, Governor Jenniffer González signed Act 38-2026, which amended five sections of Act 60. The amendment does two things:
1. It extends the program by twenty years, to December 31, 2055.
2. It replaces the 0% rate with a 4% rate for anyone who applies from 2027 onward.
The most misunderstood point: the regime that applies to you is determined by the date you file your application, not the date you move or the date the Department of Economic Development and Commerce (DDEC) approves it.
Several commercial websites claim you must establish bona fide residency before December 31, 2026. The statute does not say that. When a marketing source contradicts the law, the law prevails.
The amendment also adds an eligibility requirement: anyone who files after December 31, 2026 must show they were not a resident of Puerto Rico for at least six years before moving.
Existing decrees are not affected. Article 6 of Act 38-2026 provides that the Government will continue to honor rights acquired under Act 22-2012 and Act 60-2019.
Act 60 Before and After 2027: Side-by-Side Comparison
Everything below refers to Puerto Rico taxes. Your federal tax obligation is determined separately.
Type of income | Filed by Dec. 31, 2026 | Filed on or after Jan. 1, 2027 |
Interest and dividends | 0%, through Dec. 31, 2035 | Fixed 4%, through Dec. 31, 2055 |
Capital gains accrued after the move | 0%, through Dec. 31, 2035 | Fixed 4%, through Dec. 31, 2055 |
Pre-move capital gains, sold 10+ years later | 5% | 5% |
Required years of prior non-residency in PR | No six-year requirement | Six years |
Program end date | 2035 | 2055 |
Source: Act 38-2026, Sections 2022.01, 2022.02 and 1020.02(a)(4). Same reading in Procopio and Microjuris.
The trade-off deserves attention. If you file after December, you pay 4% but lock in twenty more years of benefits. If you file now, you keep 0%, but that exemption expires in 2035 regardless.
Which option is better depends on the size of your unrealized gains and when you plan to sell. That analysis belongs to a CPA or tax attorney, not a real estate broker.
Who Qualifies for Act 60?
This section determines whether the rest of this guide applies to you. The Chapter 2 decree is designed for people who move their residence to Puerto Rico. It is not a benefit for buying property.
You move to Puerto Rico and establish residency
This is the only profile Chapter 2 fully applies to. You become a Puerto Rico resident, and your passive income receives the decree’s preferential treatment.
In exchange, the law imposes four obligations: live on the island 183 days a year, file an annual report with DDEC, donate $10,000 to an eligible nonprofit and pay regular tax on income that does not come from investments (GAO-26-107225, p. 9).
You buy a second home and keep your U.S. domicile
In this case, the decree does not apply to you. If you remain a resident of a U.S. state, neither the 0% nor the 4% rate comes into play.
The property also does not meet the law’s purchase requirement, because that requirement calls for a principal residence in Puerto Rico. A vacation home does not meet that definition.
None of this means the purchase is a bad idea. It means it should be evaluated on its merits as a real estate investment, not on a tax benefit you will not receive.
You buy to rent or invest without moving
Chapter 2 does not apply here either. A rental property bought by someone who does not live on the island is governed by the ordinary rules of the Puerto Rico Internal Revenue Code and the federal tax code.
Rental income is not exempt just because the property is in Puerto Rico. This is the most common misconception on the whole topic.
A costly distinction
If you do move and want your purchase to count toward the decree, that property must be your principal residence, not a rental unit.
Buying an apartment for short-term rental does not meet the requirement. You can do both, but they are two separate transactions with two separate purposes.
Act 60 also includes business incentives, such as Export Services, manufacturing and tourism. Those follow their own rules, and Act 38-2026 did not change them.
Act 60 Property Requirement: The Home You Must Buy
Decree holders are required to buy a residence in Puerto Rico. Section 6020.10(c) sets out the conditions, and it pays to read them one by one, because each rules out a structure people often propose. The home must be:
1. Bought within two years of obtaining the decree.
2. In your name, or jointly with your spouse, or in the name of a trust described in Section 2022.07.
3. Bought from a fully unrelated seller, whether an individual or a company, with no ties to the decree holder.
4. Your principal residence in Puerto Rico.
5. Held in exclusive ownership for the entire term of the decree, and documented in the annual report.
For applications filed on or after January 1, 2027, there is an added registry requirement: full ownership must be recorded, or pending recording, in the Puerto Rico Property Registry.
In practice, these conditions rule out three common structures: buying from a relative or related entity, titling the principal residence in an LLC, and leaving the deed unfiled with the Registry.
That last point matters more than it seems. Recording times at the Property Registry can run long, so this should be planned from the closing, not after.
Verification note: the statute counts the two years from obtaining the decree. Several secondary sources count them from the move. If that difference affects your timeline, confirm it with your attorney before signing a purchase option.
Act 60 and Federal Taxes: What the Decree Doesn’t Cover
The decree is an agreement with the Government of Puerto Rico about Puerto Rico taxes. Federal tax treatment is determined separately, and the IRS decides on its own whether you actually live on the island.
Having the decree is not enough for the IRS. You must meet its own presence test, which has several alternatives; the best known is being in Puerto Rico 183 days during the tax year (GAO-26-107225, p. 9).
Misclassifying the source of income is the costliest mistake. If your assets appreciated before you moved, that gain does not become Puerto Rico income just because you sell after arriving. Federal rules split it between the two periods.
This is not a theoretical risk. The IRS has run an enforcement campaign focused on this group since 2021, and in June 2025 an investor pleaded guilty to submitting a false document to the IRS in order to qualify, with agreed restitution of about $15.3 million (GAO-26-107225, Appendix II).
A decree can also be lost. DDEC can revoke it for noncompliance. A late annual report can sometimes be cured, but failing the residency requirement cannot be fixed after the fact.
Puerto Rico Housing Market Data: 2025 Mortgage Figures
In 2025, 12,031 home purchase loans were originated in Puerto Rico. Of those, 695 were for second homes and 768 for investment properties, or 12.2%: roughly one in eight.
Occupancy | Loans originated | Median loan | Median property value | Median LTV |
Principal residence | 10,568 | $145,000 | $165,000 | 96.5% |
Second home | 695 | $185,000 | $245,000 | 75.0% |
Investment | 768 | $125,000 | $175,000 | 75.0% |
Source: HMDA 2025 public mortgage data, Puerto Rico.
Act 60 Deadlines and Next Steps
A little over three months remain until December 31, 2026, the cutoff to file under the 0% regime.
Date | What happens |
December 31, 2026 | Last day to file an application under the current regime (0% through 2035) |
January 1, 2027 | The 4% rate, the six-year non-residency requirement and the registry requirement take effect |
December 31, 2035 | Benefits end for decrees filed through 2026 |
December 31, 2055 | Program ends for decrees filed from 2027 onward |
The annual compliance report is due no later than November 15 following the close of the calendar year (Section 6020.10(a)(3)). The next one is due November 15, 2026.
How to apply for Act 60: steps in order of importance
1. Decide whether you will really move your residence. If not, Chapter 2 is off the table and the purchase should be evaluated on its own.
2. Talk to a CPA or tax attorney before filing. DDEC takes 60 to 120 days to process applications, and an incomplete application does not hold your place.
3. File through the DDEC Incentives Portal. The portal’s timestamp is what sets your regime.
4. Choose your principal residence and structure the closing so the deed reaches the Property Registry on time.
5. Calendar the annual report and the $10,000 donation from year one.
A real estate broker does not handle steps 2 and 3. Our role begins at step 4.
Frequently Asked Questions About Act 60
What changes in Act 60 in 2027?
Act 38-2026 replaces the 0% Puerto Rico tax rate on interest, dividends and post-move capital gains with a fixed 4% rate for anyone who files a Resident Individual Investor application on or after January 1, 2027. It also extends the program to December 31, 2055, adds a six-year prior non-residency requirement and requires the home purchase to be recorded in the Puerto Rico Property Registry.
What is the Act 60 deadline to keep the 0% rate?
Your application must be filed by December 31, 2026. The regime that applies is set by the date you file the application, not the date you move or the date DDEC approves it.
Do I qualify for Act 60 if I buy a vacation home in Puerto Rico?
No. The Resident Individual Investor decree applies only to people who move their residence to Puerto Rico. A second home or seasonal property owned by someone who remains a resident of a U.S. state does not qualify, and it does not satisfy the law’s home-purchase requirement.
Is rental income in Puerto Rico tax-exempt under Act 60?
No. Rental property owned by someone who does not live on the island is taxed under the ordinary rules of the Puerto Rico Internal Revenue Code and the federal tax code. Owning property in Puerto Rico does not by itself make rental income exempt.
Can I hold my Act 60 residence in an LLC?
No. The home must be bought in your own name, jointly with your spouse, or through a trust described in Section 2022.07, from an unrelated seller, and it must be your principal residence in Puerto Rico.
Does an Act 60 decree exempt me from federal taxes?
No. The decree covers Puerto Rico taxes only. The IRS applies its own residency tests, such as being present in Puerto Rico 183 days during the tax year, and gains that accrued before you moved can still be treated as U.S.-source income.
What are the annual Act 60 requirements?
Decree holders must live in Puerto Rico 183 days a year, file an annual report with DDEC (due by November 15 following the close of the calendar year), donate $10,000 to an eligible nonprofit and pay regular tax on income that does not come from investments.
Sources, Verification Notes and Disclaimers
Primary sources
• Act No. 38 of March 10, 2026 (House Bill 505), LexJuris: full text of the amendments.
• Act 60-2019, Puerto Rico Incentives Code, as amended, rev. July 16, 2026, Office of Management and Budget.
• GAO-26-107225, Puerto Rico: IRS Should Improve Oversight of Taxpayers Claiming Exemption from Federal Taxes, December 2025.
• HMDA 2025, public mortgage lending records, Puerto Rico.
• La Fortaleza press release on the signing of House Bill 505, March 10, 2026 (Spanish).
Disclaimers
This guide is for informational and educational purposes only. It is not legal, tax or financial advice, nor an offer of credit or specific terms. Market data shown here is historical.
Act 60 requirements and regulations may change. Confirm current rules with DDEC, the Puerto Rico Department of Treasury (Hacienda) and a licensed professional before making any decision.
Information current as of September 18, 2026.
Each office is independently owned and operated. The Coldwell Banker® System fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Licensed broker E-497.
