If you’re considering buying a luxury home in Puerto Rico to take advantage of those famous Act 60 tax incentives, you’ve probably heard there’s a new law in town. In 2025, Puerto Rico updated Act 60 – and if you’re a high-end homebuyer eyeing the island, you’re likely wondering what this means for your relocation plans. The good news is that Puerto Rico is still a tropical tax haven for new residents – but there are some key tweaks to know. Let’s dive into how the latest Act 60 reform impacts luxury real estate buyers and why it might light a fire under your decision timeline.

Act 60 at a Glance (and What’s New)

Act 60 (a.k.a. the Incentives Code) has been a magnet for affluent individuals, offering incredible tax breaks for those who relocate to Puerto Rico. Traditionally, Act 60’s Individual Investor program granted 0% tax on Puerto Rico-sourced capital gains, interest, and dividends, plus just a 4% corporate tax on business income – a night-and-day difference from tax rates on the mainland. These perks, combined with island living, are a huge draw for entrepreneurs, investors, and retirees buying luxury properties in PR. 

So, what changed in 2025? Two main things, really:

• A 4% Tax for Future Act 60 Participants: Starting in 2026, anyone new to Act 60 will pay a flat 4% tax on their capital gains, interest, and dividend income (previously 0%) . In plain terms, if you move to Puerto Rico under Act 60 after this kicks in, you’ll contribute a small 4% slice of your investment earnings to the local treasury. If you’re already an Act 60 decree holder (or secure your decree before the end of 2025), you keep the 0% rate – you’re grandfathered in . But new arrivals from 2026 onward will factor in that slight tax.
• Act 60 Program Extended to 2055: The incentives were set to sunset in 2035, which could have been right in the middle of your retirement! The reform extends the program for an extra 20 years (until 2055) . For luxury homebuyers, this is a big deal. It means if you relocate and purchase property in Puerto Rico, you have long-term certainty that these tax benefits will be around, supporting your financial planning for decades. You’re not making a 5- or 10-year bet; it’s a 30-year plan.

Aside from those headliners, the spirit of Act 60 remains the same: it’s designed to attract new residents (you do need to become a bona fide resident of PR to get the benefits, which means living on the island at least half the year and, yes, purchasing a home as your primary residence). The recent reform also added a requirement that new applicants must not have been Puerto Rico residents for the prior 6 years – this mainly targets former residents returning, and ensures the incentives are focused on genuinely new influxes of capital and people. If you’re coming from, say, New York or London, you’re all set – that rule won’t affect you.

What Act 60 Means for Luxury Real Estate Buyers 

1. The Financial Upside Is Still Huge (Even at 4%): Let’s be real – a 4% tax on investment income is incredibly low. Mainland investors are used to paying capital gains taxes in the 15-20%+ range (higher for top earners), on top of state taxes in many cases. Even with the update, Puerto Rico’s deal is in another league. For example, if you realize a large gain from stocks or crypto as a PR resident under Act 60’s new rules, you’d pay 4% to Puerto Rico and 0% to the IRS on that gain – whereas you might have paid around 23.8% federal + state taxes on the mainland. That’s tens of thousands saved on every $100k of gain, which more than offsets the costs of relocating or the property taxes on a multi-million-dollar home. (And speaking of property taxes, Act 60 still gives a hefty 75% exemption there too , which is a nice perk when you’re buying prime real estate.)
2. Increased Urgency to Buy and Apply Now: If you’ve been touring those oceanfront mansions and penthouses but haven’t pulled the trigger, the clock is now ticking a bit faster. Why? Because if you complete your Act 60 application by December 31, 2025, you can still snag the 0% tax rate on capital gains, interest, and dividends under the “old” rules . In other words, there’s a premium to being an early mover. This window creates a surge of urgency – we expect to see a wave of savvy buyers rushing to close on properties and submit their applications before the deadline. For you, that means two things: a) act sooner rather than later to secure the best deal (both tax-wise and possibly price-wise on real estate, as demand could jump), and b) work with someone who can streamline the process. Christian can connect you with reputable local attorneys and tax pros to get your Act 60 decree application in motion while helping you find the right property – timing is everything now.
3. Confidence in Long-Term Investment: Luxury homebuyers aren’t just thinking about next year; you’re thinking about the next generation. The extension of Act 60 benefits to 2055 should give you great comfort that Puerto Rico is committed to this program long-term. You can buy that dream home knowing the favorable tax environment is not a here-today, gone-tomorrow political gimmick – it’s baked into Puerto Rico’s economic strategy for decades. This makes investing in high-end real estate on the island even more attractive. You could plan to keep a property in the family, knowing your kids might even benefit from Act 60 incentives when they’re adults, or feel confident that the resale value down the line will reflect the enduring appeal of PR’s tax haven status.
4. Lifestyle Matters – and Remains Unchanged: Importantly, none of the reforms diminish the lifestyle part of the equation. If you’re moving under Act 60, you’re likely not just chasing a tax break – you’re excited about what life in Puerto Rico offers. From the golf courses and beaches of Dorado Beach and Palmas del Mar, to the dining and culture of San Juan, that allure is as strong as ever. The new law doesn’t add any harsher residency rules beyond what already existed (the 183-days-per-year presence, etc.). In fact, by making the program more sustainable, it arguably ensures that the vibrant communities of Act 60 relocators – entrepreneurs, investors, remote workers – will continue to grow. You’ll be in good company on the island for years to come.

Planning Your Move in Light of the Changes