Puerto Rico: Overview

RENTAL YIELDS

Yields are good in Puerto Rico

Gross rental income on a three-bedroom apartment in San Juan is around 7.24%. A four-bedroom house can earn around 5.61%.

Lower yields are expected in coastal areas. Apartments have yields of around 5.25%. A three-bedroom apartment in the coastal area can earn income of 4.18%. Apartments and houses in coastal areas are both more expensive than in San Juan, with three-bedroom apartments and four-bedroom houses selling for $520,00 and $680,000, respectively.

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TAXES AND COSTS

Taxes are high

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	4.2%	8.1%	9.0%
Click here to see a worked example
Source: Disclaimer

Rental Income: Gross rental income of non-residents is taxed at a flat rate of 29%, withheld by the tenant.

Capital Gains: Capital gains taxes are imposed at a flat rate of 29% for non-residents.

Inheritance: Inheritance taxes are levied on the net asset’s value, and imposed at progressive rates from 18% to 50%.
to 50%.

Residents: A resident taxpayer can qualify for personal deductions and additional deductions.

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BUYING GUIDE

Buying costs are low to moderate in Puerto Rico

Roundtrip transaction costs range from 6% to 10.50% of property value. The real estate agent's fee, at around 4% - 6%, accounts for the greater part of the costs. Maximum notary fee allowable is 1% of the property value for the first US$500,000 plus 0.5% of the amount in excess of $500,000.

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LANDLORD AND TENANT

The law is pro-tenant

Rent: Rents and rent increases can be freely negotiated. The tenant must pay the rent on time and the landlord must maintain the property for the tenant’s use.

Tenant Security: Expiration of rental agreement, non-payment of rent, breach of contract, and misuse of the premises are grounds for eviction in Puerto Rico. The renewal of the contract is one year for yearly rental agreements and one month for monthly rental agreements.

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ECONOMIC GROWTH

A blend of US and Spanish Caribbean

Puerto Rico (pop. 4 million) is a self-governing commonwealth in association with the United States of America. The US has authority over interstate trade, nationality and citizenship, currency, military, and other areas generally controlled by the federal system. Puerto Rico has control over its internal affairs.

Puerto Ricois where four centuries of Spanish Caribbean culture comes face to face with the American convenience store. This leads to some strange juxtapositions - parking lots and plazas, freeways and fountains, skyscrapers and shanties - but it's all apiece with the Caribbeans’ hybrid history.

Puerto Rico is different from the other 50 US states because it has its own local taxation system, it is exempted from the Internal Revenue Code, it has no voting representation in either house of the US Congress, and Puerto Ricans cannot vote in the presidential elections.