If you’ve been researching ways to reduce taxes legally, you have likely already come across Puerto Rico’s Act 60 tax incentives. However, many people do not realize that the Act 60 Puerto Rico program offers some of the most attractive benefits available, including a 0% tax rate on certain capital gains after establishing residency. Additionally, unlike moving abroad, you keep your U.S. citizenship and passport.
At Casillas Realty, we don’t just know Act 60 on paper. We have personally guided hundreds of Act 60 families to their homes in Palmas del Mar. Our founder, Ricardo Casillas, has lived in Palmas del Mar for over 48 years, developed communities here, and holds leadership roles across the community’s most important institutions. When you work with us, you’re not talking to someone who read about this place, you’re talking to someone who helped shape it.
This guide covers everything you need to know: what Act 60 offers, how to qualify, what the application process looks like, and why Palmas del Mar has become the address of choice for Act 60 residents across the United States.
Last updated: March 2026. All Act 60 requirements and figures reflect current Puerto Rico law and the most recent DDEC guidance, including Act 38-2026.
⚠️ Critical 2026 Deadline: Act Now to Lock In 0% Tax Rates
Puerto Rico’s Act 38-2026 (signed March 2026) extended the Act 60 program through 2055 — but with a pivotal change: applicants who file on or after January 1, 2027 will receive a 4% preferential rate on capital gains, dividends, and interest income, rather than the current 0% rate.
If you want the full 0% benefit, your Act 60 decree must be filed under today’s rules — and you have less than 9 months. Contact Ricardo Casillas today to start your application →
Table of Contents
- What Is Act 60?
- Who Should Consider Act 60?
- The Tax Benefits: The Numbers
- How to Qualify
- Act 60 vs. Act 22 vs. Act 20
- Why Palmas del Mar
- Act 60 Properties at Palmas del Mar
- How to Apply: Step-by-Step
- Frequently Asked Questions
What Is Puerto Rico’s Act 60?
Puerto Rico’s Act 60, formally known as the Puerto Rico Incentives Code, is a comprehensive economic development law signed in 2019. It consolidated and modernized a series of earlier tax incentive laws, most notably Law 20 (Export Services Act) and Law 22 (Individual Investors Act), into a single, unified framework.
The core premise of Act 60 is straightforward: Puerto Rico, as a US territory, has constitutional authority to set its own tax rates within the broader U.S. tax framework. The law uses that authority to attract high-net-worth individuals, entrepreneurs, and businesses by offering dramatically lower tax rates than any US state, while allowing participants to retain their US citizenship and all the rights that come with it.
Act 60 at a Glance:
- What it is: A Puerto Rico law offering major tax reductions for qualifying new residents and businesses.
- Who it’s for: U.S. citizens, U.S. residents, and certain international investors who establish bona fide residency in Puerto Rico and comply with applicable tax and immigration requirements.
- Is it legal? Yes, it is a properly enacted statute, recognized under the US territorial tax code, and not challenged by the IRS as a loophole.
- When enacted: 2019 (replaced Laws 20 & 22, which date to 2012). Extended through 2055 by Act 38-2026.
- 2026 rate change: Applications filed before January 1, 2027, qualify for 0% on capital gains, dividends, and interest. Applications filed on or after January 1, 2027, will be subject to a 4% preferential rate on those same income types under Act 38-2026.
It is important to understand that Act 60 is not a loophole or a gray area. It is a deliberate economic development tool, designed and enacted by the Puerto Rico legislature to stimulate the island’s economy. The IRS recognizes Puerto Rico’s territorial tax authority under Section 933 of the US Tax Code.
Who Should Consider Act 60?
Act 60 is not for everyone, but for the right person, it can be one of the most financially significant decisions of their lifetime. The program is especially powerful for:
- Stock market investors — If you hold appreciated equities, ETFs, or mutual funds and plan to sell, establishing Puerto Rico residency before you sell means those gains are taxed at 0% rather than up to 23.8% federally. The earlier you move, the more of your portfolio growth you protect.
- Crypto holders — Unrealized crypto gains are one of the most common reasons people explore Act 60. Moving to Puerto Rico before selling means post-move appreciation on Bitcoin, Ethereum, and other digital assets is taxed at 0% under the current program rules.
- Business owners with remote or export services — If your company provides services to clients outside Puerto Rico, you may qualify for Act 60 Chapter 3 (formerly Law 20) and pay a flat 4% corporate rate on that income — compared to 21% federal plus state taxes on the mainland.
- Entrepreneurs earning income outside Puerto Rico — Founders, consultants, and online business owners whose revenue comes from outside the island can structure their operations to take advantage of both the individual investor and export services chapters of Act 60.
- High-income individuals seeking a lower-tax jurisdiction — If you are in the top federal income brackets and are open to a genuine lifestyle change, Puerto Rico offers a legal path to dramatically reduce your tax burden — without giving up US citizenship, leaving the country, or sacrificing world-class amenities.
Are You Searching for Any of These?
If you arrived at this page because you searched for terms like “move to Puerto Rico taxes”, “Puerto Rico tax incentives for US citizens”, or “how to reduce capital gains tax legally” — Act 60 is almost certainly one of the top strategies you should be exploring. And with rates set to change for applications filed on or after January 1, 2027, the window to lock in 0% is narrowing.
Talk to Ricardo Casillas to find out if Act 60 is right for you →
Act 60 Puerto Rico Tax Benefits: The Numbers
The financial benefits of Act 60 are significant, and for investors and entrepreneurs with substantial capital gains or passive income, they can be transformative. The rates below apply to applications filed before January 1, 2027. Under Act 38-2026, applicants who file on or after that date will face a 4% rate on investment income instead of 0%. Here is the current breakdown:
- 0% tax on capital gains accrued after establishing Puerto Rico residency (current applicants only — 4% for post-2026 applicants)
- 0% tax on qualifying dividends and interest income (current applicants only — 4% for post-2026 applicants)
- 4% flat corporate rate on export services income (formerly Law 20) — unchanged under Act 38-2026
- Up to 100% exemption on certain Puerto Rico-source income depending on the nature of the income and compliance with Act 60 requirements.
How Act 60 Compares to Mainland US Rates
| Tax Type | US Federal Rate (Top Bracket) | Puerto Rico Act 60 Rate |
|---|---|---|
| Long-Term Capital Gains | Up to 23.8% (incl. NIIT) | 0% (on gains after moving) |
| Qualified Dividends | Up to 23.8% | 0% |
| Interest Income | Up to 37% | 0% |
| Corporate / Export Services | 21% federal + state | 4% |
| Property Tax | Varies by state (avg. 1.1%) | Generally lower than US mainland (not a specific Act 60 benefit) |
Act 38-2026: How Rates Change After January 1, 2027
| Income Type | Filing Before Jan 1, 2027 | Filing On/After Jan 1, 2027 |
|---|---|---|
| Long-Term Capital Gains (post-move) | 0% | 4% |
| Dividends | 0% | 4% |
| Interest Income | 0% | 4% |
| Export Services (corporate) | 4% | 4% (unchanged) |
Program extended through 2055 under Act 38-2026. Current 0% rates are locked in for decree holders who file before January 1, 2027.
Important note on capital gains: The 0% capital gains rate applies to gains accrued after you establish Puerto Rico residency. Gains on assets held before moving are generally still taxable at US federal rates when realized. This is why many Act 60 participants move before selling appreciated assets — particularly in crypto, real estate, or business equity.
How to Qualify for Act 60
Qualifying for Act 60 requires meeting a set of genuine residency and legal requirements. The IRS scrutinizes bona fide residency closely, so it is important to understand what is required — and to work with qualified advisors throughout the process.
Core Residency Requirements
- 183-day rule: You must spend at least 183 days per year in Puerto Rico.
- Closer connection to Puerto Rico: Puerto Rico must be your primary home, with your social, family, and economic ties centered there — not in a US state.
- No more than 90 days in the US mainland: Spending more than 90 days per year in any single US state can jeopardize your bona fide residency status.
- No prior Puerto Rico residency: For the individual investor chapter, you must not have been a Puerto Rico resident at any point during the 10 years prior to filing.
- Active Decree: You must apply for and receive an official Act 60 decree from Puerto Rico’s Department of Economic Development (DDEC).
- Home purchase within 2 years: Once your decree is granted, you must purchase real property in Puerto Rico for use as your principal residence within two years of receiving your decree. The property must be owned by you individually, jointly with a spouse, or through a qualifying trust, and it must serve as your primary residence, not a vacation home.
Ongoing Compliance Requirements
- Annual charitable contribution of $10,000 to qualifying Puerto Rico-based nonprofit organizations.
- Filing an annual compliance report with the DDEC.
- Maintaining Puerto Rico as your primary place of business and personal life.
- Maintain your primary residence: Your Puerto Rico home must remain your principal residence for the full validity of the decree.
Important — 2027 update on property registration: For decree applicants after January 1, 2027, proof of property ownership must show that the title to your principal residence is registered (or pending registration) in the Puerto Rico Property Registry. Applicants who receive their decree by December 31, 2026 are subject to the current, less stringent documentation standard. This is another reason not to delay your application.
Why buying your home in Palmas del Mar matters: The 2-year home purchase deadline is a firm requirement, not a suggestion. Decree holders who fail to purchase a primary residence within two years risk losing their Act 60 benefits. At Casillas Realty, we have guided more than 1,000 Act 60 families through this process, and we know exactly what types of properties, in which communities, satisfy the residency requirement and deliver the lifestyle our clients move here to enjoy.
Act 60 vs. Act 22 vs. Act 20: What’s the Difference?
Many people searching for Puerto Rico tax incentives still use the older terminology. If you’ve heard of “Law 22” or “Law 20,” here’s how they relate to Act 60:
| Name | Now Called | Who It’s For | Primary Benefit |
|---|---|---|---|
| Law 22 (2012) | Act 60 — Chapter 2 | Individual investors & passive income earners | 0% capital gains, dividends, interest |
| Law 20 (2012) | Act 60 — Chapter 3 | Export services businesses | 4% corporate rate on export services income |
In short: if you’re an investor, entrepreneur, or crypto holder looking to reduce personal capital gains taxes, you’re looking at Act 60 Chapter 2 (formerly Law 22). If you run a business that provides services to clients outside Puerto Rico, you may also qualify for Act 60 Chapter 3 (formerly Law 20). Many Act 60 residents benefit from both chapters simultaneously.
Why Palmas del Mar Is the #1 Choice for Act 60 Residents
Puerto Rico has many communities, but Act 60 residents who have done their research consistently choose Palmas del Mar in Humacao. Here’s why:
- Security & Privacy: Gated, 24/7 security with controlled access, creating a private and well-managed environment valued by families, full-time residents, and second-home owners alike.
- World-Class Amenities: Two championship golf courses, full-service marina, beach club, tennis, pickleball, fitness center, equestrian center, and more.
- Established Act 60 Community: Hundreds of Act 60 decree holders already live here — a built-in network of like-minded professionals.
- Easy Access: 45 minutes from Luis Muñoz Marín International Airport, with direct flights to major US cities daily.
- Schools: The Palmas Academy on-site, quality hospitals nearby, and excellent healthcare infrastructure in Humacao.
- Real Estate Variety: Oceanfront condos, custom homes, golf villas, marina residences — at prices well below comparable mainland luxury markets.
Ricardo Casillas has lived in Palmas del Mar for over 48 years. He has developed communities here, served on its most important boards, and built relationships with virtually every corner of this community. He is currently President of the Palmas del Mar Business Association, Vice-President of the Palmas del Mar HOA Board, and Member of the Palmas del Mar Architectural Review Board — meaning he doesn’t just sell homes in Palmas del Mar, he helps govern it.
From beachfront condominiums in Beach Village to custom homes in The Estates and golf course villas in the heart of the resort, Palmas del Mar offers more than 40 distinct communities — each with its own character, price point, and lifestyle. No one knows these communities better than Casillas Realty.
Ready to explore Act 60 properties? Browse our exclusive Palmas del Mar listings →
Act 60 Properties at Palmas del Mar: What Can You Buy?
One of the most important steps in your Act 60 journey is finding the right property. Here’s an overview of what’s available in Palmas del Mar:
- Oceanfront & Beachfront Condominiums — The most popular choice for Act 60 buyers. Turnkey, low-maintenance, and a strong residency signal. Starting from the mid-$400Ks.
- Custom Luxury Homes — For buyers seeking privacy, space, and long-term equity. Multiple gated neighborhoods with custom lots available.
- Golf Course Villas & Townhomes — Excellent value with stunning views. Popular with buyers who want amenity access without oceanfront pricing.
- Marina Residences — Ideal for boating enthusiasts. Direct marina access with a full-service yacht harbor.
- Commercial Properties & Lots — For Act 60 Chapter 3 (export services) decree holders establishing a Puerto Rico business presence.
Owning vs. Renting: Many first-time visitors consider renting while they “test” island life. However, for Act 60 decree holders, owning your primary residence is a significant advantage. Property ownership is one of the strongest demonstrations of bona fide residency, a core requirement of maintaining your Act 60 decree, and in most cases, provides long-term appreciation in a market that has seen strong demand since 2019. Puerto Rico also generally has lower property taxes than most US states, making ownership here even more attractive.
How to Apply for Act 60: A Step-by-Step Guide
The Act 60 application process is manageable — but it requires careful documentation and ideally involves a qualified Act 60 attorney. Here is the general process:
⏰ The clock is running. Under Act 38-2026, applicants who file on or after January 1, 2027 will face a 4% rate on capital gains, dividends, and interest — instead of the current 0%. You have less than 9 months to file under today’s rules. Casillas Realty has helped more than 1,000 families move through this process efficiently. Schedule your free consultation with Ricardo now →
- Confirm Your Eligibility. Review the residency requirements and ensure you have not been a Puerto Rico resident in the past 10 years (for the individual investor chapter). Consult with a qualified Act 60 attorney to evaluate your personal tax situation before making any moves.
- Establish Bona Fide Residency. Begin spending at least 183 days per year in Puerto Rico. Open a bank account, get a Puerto Rico driver’s license, register your vehicle, and establish your permanent home here. This is the step where Casillas Realty enters the picture.
- Purchase Your Primary Residence Within 2 Years. Once your decree is granted, you must purchase real property in Puerto Rico within two years and use it as your principal residence. This is a firm requirement, not optional. You must own the property individually, jointly with your spouse, or through a qualifying trust, and you must use it as your primary home, not a vacation property. For decrees issued after January 1, 2027, you must also register the title in the Puerto Rico Property Registry. Casillas Realty helps Act 60 decree holders find and close on the right home within this timeframe.
- File Your Act 60 Decree Application. Submit your application to Puerto Rico’s Department of Economic Development and Commerce (DDEC). Include supporting documentation of your residency, income sources, and intent to remain in Puerto Rico. We strongly recommend that you work with an attorney to guide you through this step.
- Make Your Annual Charitable Contribution. Once your decree is granted, you must contribute $10,000 annually to qualifying Puerto Rico-based nonprofits. This requirement is mandatory, not optional, and you must document it annually.
- File Annual Compliance Reports. Each year, you must file a compliance report with the DDEC confirming you have met the residency and contribution requirements. Failure to file can result in revocation of your decree.
- File Puerto Rico Tax Returns. As a bona fide Puerto Rico resident, you file a Puerto Rico tax return. Work with a CPA experienced in Act 60 compliance to ensure correct filing.
We are not attorneys or tax advisors — and we’ll always recommend you work with qualified professionals for the legal and financial components of your Act 60 application. What we are is the most knowledgeable real estate team in Palmas del Mar, with the experience of more than 1,000 successful Act 60 relocations. We can refer you to trusted Act 60 attorneys, CPAs, and advisors — and then make sure you find the right home to anchor your new life here.
Have questions about the Act 60 process? Schedule a free consultation with Ricardo Casillas →
Frequently Asked Questions About Act 60
What changes if I apply for Act 60 on or after January 1, 2027?
Under Act 38-2026 (signed March 2026), the Act 60 program has been extended through 2055 — but with a significant rate change for new applicants. If you file your Act 60 decree application on or after January 1, 2027, you will be subject to a 4% preferential rate on capital gains, dividends, and interest income, rather than the current 0% rate. The 4% corporate rate for export services businesses under Chapter 3 remains unchanged. Decree holders who file before January 1, 2027 lock in the 0% rates under the current rules. If maximizing your tax savings is the goal, filing before the end of 2026 is essential.
Can I keep my US citizenship if I move to Puerto Rico?
Yes. Puerto Rico is a US territory. Moving there does not affect your US citizenship or passport in any way. You remain a full US citizen with all associated rights and protections.
Do I still file US federal taxes if I live in Puerto Rico?
Puerto Rico residents who meet bona fide residency requirements and whose income is Puerto Rico-sourced are generally exempt from US federal income tax on that income. You file a Puerto Rico tax return instead. However, any income earned from US sources — or gains on assets held before moving — may still be subject to federal tax. Consult a qualified Act 60 CPA for your specific situation.
How many days a year do I need to live in Puerto Rico?
You must spend at least 183 days per year in Puerto Rico and establish stronger ties to Puerto Rico than to any US state or foreign country. Days spent in Puerto Rico are carefully tracked — your attorney and CPA will guide you on how to document them correctly.
Is Act 60 legal? Is it really recognized by the IRS?
Yes — Act 60 is a properly enacted Puerto Rico statute, and Puerto Rico’s authority to set its own tax rates is recognized under Section 933 of the US Tax Code. It is not a loophole. The IRS does scrutinize bona fide residency claims, which is why genuine residency — including owning your home in Puerto Rico — is essential. When done correctly with proper professional guidance, Act 60 is fully legal and defensible.
Do I need to own a home in Puerto Rico to qualify for Act 60?
Yes — and there is a firm deadline. Once your Act 60 decree is granted, you are required to purchase real property in Puerto Rico for use as your principal residence within two years. The property must be owned by you individually, jointly with a spouse, or through a qualifying trust, and must serve as your primary home — not a vacation property. Decree holders who fail to meet this 2-year purchase deadline risk losing their Act 60 benefits. Additionally, for applicants receiving decrees after January 1, 2027, the title to the property must be registered (or pending registration) in the Puerto Rico Property Registry as proof of ownership.
Can my spouse and children qualify along with me?
Yes. Spouses and dependents who relocate to Puerto Rico and meet the residency requirements can benefit from Act 60 protections alongside the primary applicant. In certain cases, spouses may apply for separate decrees, subject to applicable requirements.
Does the Act 60 program expire?
The Act 60 Individual Resident Investor program has been extended through 2055 under Act 38-2026. However, the tax benefits depend on when you apply. Applicants who file on or before December 31, 2026, may qualify for the current 0% tax framework, while applications filed on or after January 1, 2027, are subject to a 4% preferential rate. Decrees already granted are generally honored under the terms in effect at the time of issuance.
What is the annual charitable contribution requirement for Act 60?
Act 60 individual decree holders are required to make an annual charitable contribution of $10,000 to qualifying Puerto Rico-based nonprofit organizations. This requirement ensures that Act 60 residents contribute to the local community. Your Act 60 attorney can provide a list of qualifying organizations.
About the Author: Ricardo Casillas
Ricardo Casillas has lived in Palmas del Mar for over 48 years. During that time, he has helped develop communities, build local institutions, and establish himself as one of the most trusted real estate experts in Puerto Rico. He has personally guided hundreds of Act 60 families through the relocation and home-buying process.
An active leader within Palmas del Mar, Ricardo serves in key roles across the community. He is currently President of the Palmas del Mar Business Association, Vice President of the Palmas del Mar HOA Board, and a member of the Palmas del Mar Architectural Review Board. This level of involvement provides clients with unique insight, access, and local knowledge that few others can offer.
Former boards served: Palmas Athletic Club Board, Palmanova Plaza Board, Palmas Academy Board.
Ready to start your Act 60 journey? Casillas Realty has guided hundreds of families to their Palmas del Mar home. Browse Act 60 properties → or schedule a free consultation with Ricardo →
Disclaimer: This guide is provided for informational purposes only and does not constitute legal, tax, or financial advice. Act 60 eligibility and compliance requirements are complex and vary based on individual circumstances. Casillas Realty is a real estate brokerage — we are not attorneys or tax advisors. We strongly recommend consulting a qualified Act 60 attorney and a Puerto Rico CPA before making any relocation or investment decisions.