|
|
09-01-2014, 11:59 PM
|
#1
|
gone traveling
Join Date: Oct 2007
Posts: 1,135
|
Puerto Rico Act 22
I wonder if anyone is familiar with this and has specific insight. I have heard very few investors actually moved to PR as a result of this, however, i recall a year or two ago some big media about people moving there due to Act 22.. PR used to not be a very nice place to live, and getting "stuck" there for 183 days a year may not exactly be pleasant. But the tax savings are pretty amazing.....
Act 22 Objective: To attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bona fide residents of Puerto Rico
[mod edit to comply with copyright regs]
Seems like a wise move for higher net worth individuals who are throwing off significant dividend and capital gains (especially short term gains from, say, trading).
Likewise seems like a fairly interesing 20+ year tax shelter that would allow money to be earned tax free for a fairly long duration - and one could move back to USA at any point too... not necessarily locked in.
Like to get a discussion going about this. Any decent places to live in PR? Is it at all safe (used to be a real hell hole and not at all safe). . .
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
09-02-2014, 07:18 AM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,594
|
Thanks for the info, biker
Is 1099-R income (pension/401k/IRA) still federally taxable? What about Social Security?
-gauss
|
|
|
09-02-2014, 08:20 AM
|
#3
|
Dryer sheet wannabe
Join Date: Aug 2014
Posts: 24
|
Good subject, also would like to know about the SS question, will try looking at PR sites that might shed some light on this
|
|
|
09-02-2014, 10:40 AM
|
#4
|
Full time employment: Posting here.
Join Date: Apr 2006
Posts: 969
|
I am glad someone started this thread.
Personally, I like Puerto Rico and do not believe I would not mind spending 1/2 the year there.
Educating myself on the implications of this act has been on my ToDo list for some time; but, I have not made any real progress yet.
__________________
If there's one thing in my life that's missing; It's the time I spend alone
Sailing on the cool and bright clear waters; There's lots of those friendly people
Showin me ways to go; And I never want to lose your inspiration
|
|
|
09-02-2014, 11:46 AM
|
#5
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
|
This act does not free a US citizen or resident from paying US tax on income, they will continue to be subject to US federal tax obligations, just as before. Income will not be subject to local taxation, which might be of interest to businesses.
|
|
|
09-02-2014, 02:26 PM
|
#6
|
Full time employment: Posting here.
Join Date: Apr 2006
Posts: 969
|
Quote:
Originally Posted by MichaelB
This act does not free a US citizen or resident from paying US tax on income, they will continue to be subject to US federal tax obligations, just as before. Income will not be subject to local taxation, which might be of interest to businesses.
|
This is my concern; but, a brief Forbes article and IRS Publication 1321 seem to indicate that some capital gains (sales of stocks, funds, etc.) as well as interest payments would not be taxed for Puerto Rico residents under Act 22.
__________________
If there's one thing in my life that's missing; It's the time I spend alone
Sailing on the cool and bright clear waters; There's lots of those friendly people
Showin me ways to go; And I never want to lose your inspiration
|
|
|
09-02-2014, 07:08 PM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,203
|
Quote:
Originally Posted by MichaelB
This act does not free a US citizen or resident from paying US tax on income, they will continue to be subject to US federal tax obligations, just as before. Income will not be subject to local taxation, which might be of interest to businesses.
|
If this is true then I do not see the benefit of it... there are enough states in the US that do not charge any state taxes... so why choose PR if it does not save any US taxes...
|
|
|
09-02-2014, 08:51 PM
|
#8
|
Thinks s/he gets paid by the post
Join Date: Apr 2011
Location: Madison
Posts: 1,337
|
I've been to PR. Nice place to spend a couple of weeks. Was ready to go when the deployment ended though. Spend half a year there to gain a few bucks on taxes Not me.
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
|
|
|
09-02-2014, 09:32 PM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Quote:
Originally Posted by dtbach
I've been to PR. Nice place to spend a couple of weeks. Was ready to go when the deployment ended though. Spend half a year there to gain a few bucks on taxes Not me.
|
For about a decade we visited PR about every year or two. I have seen most of the island, well beyond the usual tourist traps. There are lots of interesting things to see and do in PR. Not a hellhole at all.
That said, I think the only set of circumstances under which using the PR tax loophole would make sense is if you are fluent in Spanish (and can understand the Puerto Ricans), and you appreciate the island and its people enough for themselves that you would enjoy spending 6 months there annually. I don't have the fluency, but enjoy PR.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
09-02-2014, 10:52 PM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,007
|
Quote:
Originally Posted by CoolChange
This is my concern; but, a brief Forbes article and IRS Publication 1321 seem to indicate that some capital gains (sales of stocks, funds, etc.) as well as interest payments would not be taxed for Puerto Rico residents under Act 22.
|
Wow, I don't have to move there for that benefit!
__________________
Retired since summer 1999.
|
|
|
09-02-2014, 10:53 PM
|
#11
|
Moderator Emeritus
Join Date: Apr 2011
Location: Conroe, Texas
Posts: 18,645
|
I have spent a lot of time in PR also, mainly working. Industry/manufacturing is going away. I have worked on three refinery projects towards resurrecting equipment and all have gone bust. No crude oil there so refineries have to import expensive feedstock. Also, decades of poor maintenance practices have turned most plants into rust buckets. On the tuna canning locations, most are gone now that Asian countries can it cheaper. One generic drug company I know of closed its doors a few years ago. So from an employment standpoint, the counrty is leaning towards trouble.
The above means the economy must rely on tourism and services to make a go of it. Hotels in San Juan are very expensive and it's a dangerous town.
I love the countryside and the smaller shore towns. Good place for a vacation. Other than that, I prefer the Mainland.
|
|
|
09-08-2014, 04:34 AM
|
#12
|
gone traveling
Join Date: Oct 2007
Posts: 1,135
|
Unfortunately the moderator edited all the key points to my post. This was a paraphrase of the key benefits of PR-22 and in no way violated copyright infringements but what ever.
I guess the key question is whether or not. 6 months in PR to qualify for Bonafide residence is tolerable. Sounds like it may not be ... Hence the fantastic tax benefits being offered. Always a catch.
Biker4Life
|
|
|
09-08-2014, 06:18 AM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,362
|
I must be missing something. Can't you accomplish the same tax result by moving to states that do not have an income tax? FL, NH etc?
__________________
Living well is the best revenge!
Retired @ 52 in 2005
|
|
|
09-08-2014, 06:24 AM
|
#14
|
Recycles dryer sheets
Join Date: Jan 2013
Posts: 312
|
No PR taxes on interest and dividends (all sources of such income, regardless of where it comes from), also no federal taxes on Puerto Rico source income. So this would still mean you have to pay federal taxes on interest & dividends. Like others have said, there are plenty of states that already don't have state taxes on these items. So I guess this is good if you come from a state that taxes these things, but from others, not so much.
That being said, I love PR, and could easily be happy living there, but I don't think I'd do it for the taxes (also, my family would think I am nuts).
|
|
|
09-08-2014, 06:42 AM
|
#15
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
|
Quote:
Originally Posted by biker4life
Unfortunately the moderator edited all the key points to my post. This was a paraphrase of the key benefits of PR-22 and in no way violated copyright infringements but what ever.
|
The deleted text was identical to what is on this web page Extra Realty, Inc.'s Puerto Rico Real Estate Blog (Bilingual) : Why Puerto Rico?.
Gumby gives an excellent explanation of why this is an issue for us http://www.early-retirement.org/foru...ste-62748.html. This well written post is easy to understand and concludes with a practical suggestion we can all follow to deal with material written by others we want to offer for discussion here.
Quote:
One still may make “fair use” of small snippets of copyrighted materials. The best way to do that is to link to the article, block quote perhaps a sentence or paragraph from the article, and then provide your own commentary on the quoted material. Not only does this help comply with the law, it also starts better discussions by letting the rest of us know what you consider to be the most important part of the article and what your thoughts are on the matter. While it is easier to simply post a whole article with commentary limited, in essence, to “look what I found”, that often does not lead to the witty and interesting discussion we want. Spending a little extra time to do it right will not only aid in our compliance with the law, but will also make this an even better forum.
|
|
|
|
09-08-2014, 06:51 AM
|
#16
|
gone traveling
Join Date: Oct 2007
Posts: 1,135
|
Pr-22 allows for FED and STATE tax free short term and long term capital gains. This is not the same as what some states offer. The federal tax free policy is significant benefit especially if considering short term capital gains, say, from trading stocks or other assets in a short term (<1 yr)
Likewise dividends and interest are totally fed and state tax free.
|
|
|
09-08-2014, 07:02 AM
|
#17
|
gone traveling
Join Date: Oct 2007
Posts: 1,135
|
As I read it, 100% TAX EXEMPTION ON DIVIDENDS AND INTEREST
New Residents will enjoy a 100% tax exemption from Puerto Rico income taxes on all dividend and interest income.
The law further states:
Interest and dividends that qualify as Puerto Rico source income will not be subject to federal income taxation under Section 933. .
Now the best part :
100% TAX EXEMPTION ON LONG-TERM and short term CAPITAL GAINS
New Capital Gains: All capital gains accrued after becoming a New Resident will be 100% exempt from Puerto Rico taxes. These gains will not be subject to US federal taxes.
There are also ways to exempt all the unrealized gains if recognized within
To qualify for the Act 22 incentives, all gains must be recognized prior to January 1, 2036.
To MOD.- not to be too harsh but There are no less than 20 sites quoting this or similar information and various paraphrases which comes from the Puerto Rico bureau of investments and notes in that documentation that the information can be quoted and or reproduced.
Sorry if I l posted a piece of an article that apparently can be reproduced. Have fun modding the board !!! Happy Monday too!
|
|
|
09-08-2014, 07:19 AM
|
#18
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
|
Quote:
Originally Posted by biker4life
To MOD.- not to be too harsh but There are no less than 20 sites quoting this or similar information and various paraphrases which comes from the Puerto Rico bureau of investments and notes in that documentation that the information can be quoted and or reproduced.
Sorry if I l posted a piece of an article that apparently can be reproduced. Have fun modding the board !!! Happy Monday too!
|
If there is an original source document that permits reproduction all you need to do is link it, as it is probably still protected by copyright. They probably allow reproduction without modification and ask they be attributed. All we are doing is trying to ensure compliance.
|
|
|
09-08-2014, 07:26 AM
|
#19
|
Dryer sheet wannabe
Join Date: Aug 2014
Posts: 24
|
Quote:
Originally Posted by brewer12345
For about a decade we visited PR about every year or two. I have seen most of the island, well beyond the usual tourist traps. There are lots of interesting things to see and do in PR. Not a hellhole at all.
That said, I think the only set of circumstances under which using the PR tax loophole would make sense is if you are fluent in Spanish (and can understand the Puerto Ricans), and you appreciate the island and its people enough for themselves that you would enjoy spending 6 months there annually. I don't have the fluency, but enjoy PR.
|
biker4life-so if one is fluent in spanish, as I and most of my family, do you consider PR would be a good place to buy property (home) as vacation and investment? As opposed to FL where I have been researching and about ready to travel there to check out areas, however, I like tropical climates. thanks
|
|
|
09-08-2014, 10:47 AM
|
#20
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
|
Quote:
Originally Posted by beach
biker4life-so if one is fluent in spanish, as I and most of my family, do you consider PR would be a good place to buy property (home) as vacation and investment? As opposed to FL where I have been researching and about ready to travel there to check out areas, however, I like tropical climates. thanks
|
I think you are responding to me. Anyway, I am not a real estate investor, so I can't really comment on that. That said, if you are considering Florida and are fluent in Spanish, I would check out PR as well.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|