I am a luxury real estate expert, not a financial advisor, tax attorney, or CPA. The transaction structures described below reflect what I see and facilitate from the real estate side. Your client’s attorney and CPA should evaluate the specific tax and legal implications of any transaction structure.

This is Week 9 of The Act 60 Briefing. We are deep into the practical side of the series now — and this week’s topic is one that will be directly relevant to how you help your clients plan the capital deployment side of their Act 60 relocation.

When your client decides to purchase a luxury property in Dorado Beach, the mechanics of that transaction are fundamentally different from what they experienced buying property on the mainland. Understanding those differences is important for advisors because the structure of the purchase directly affects your client’s liquidity, tax position, and privacy.

The First Thing to Understand: There Are No Jumbo Mortgages

Puerto Rico has three primary banks: Banco Popular, First Bank, and Oriental Bank. All three are legitimate, well-capitalized institutions. None of them offer jumbo mortgage products for multi-million-dollar luxury residential purchases.

For advisors whose clients are accustomed to structuring $5 million to $20 million residential mortgages through a private banker at JPMorgan, Morgan Stanley, or First Republic — that option does not exist in Puerto Rico. The island’s banking infrastructure does not have the same secondary market mechanisms that mainland lenders rely on for jumbo products.

This is the part where most mainland buyers initially react with surprise. But as I will show you, the alternatives are not just viable — they are often more advantageous for a financially sophisticated client than a conventional mortgage would be.

Option 1:Cash — How the Majority of Transactions Close

The majority of luxury real estate transactions in Dorado Beach close in cash. Given the buyer profile — entrepreneurs and investors with $10 million to $100 million or more in assets — this makes sense. These are capital allocation decisions, not stretching-to-afford decisions.

For the advisor: When a client deploys $6 million to $10 million in cash for a Dorado Beach property, the key planning consideration is the source of those funds. Are they liquidating a position? Deploying cash reserves? Using proceeds from a business transaction? The timing and source of the capital deployment may have tax implications that the client’s CPA should evaluate — particularly in relation to when they establish Puerto Rico residency.

Option 2:Seller Financing — The Structure That Optimizes Capital, Taxes, and Privacy

For clients who prefer not to deploy their full capital in a single transaction, I structure seller financing deals regularly. This is where the conversation becomes genuinely interesting for advisors because the structure creates multiple simultaneous advantages.

Typical Structure: $5 Million Property Example

• Down payment: 40-50% ($2.5 million at 50%)
• Seller-financed balance: $2.5 million carried by the seller
• Interest rate: 7.65% (at time of writing)
• Term: 3 to 5 years
• Payments: Interest only ($15,937/month on $2.5 million at 7.65%)
• Balloon: Full balance due at end of term

Why This Structure Creates Triple Advantage

Advantage 1 — Capital preservation. The client keeps $2.5 million liquid and deployed in their portfolio or business. For a client whose working capital generates returns exceeding the 7.65% financing cost, this is a net-positive capital allocation. The advisor can evaluate whether the cost of financing is justified by the expected return on the preserved capital — which it often is for active entrepreneurs and investors.

Advantage 2 — Tax savings through LLC structuring. When the transaction is structured through an LLC rather than a personal deed, the buyer can save the 1% luxury tax on purchases over $1 million. On a $5 million property, that is a $50,000 savings at closing. On a $20 million property, $200,000. The specific tax implications should be evaluated by the client’s attorney, but this is a well-established structure in the Dorado Beach market.

Advantage 3 — Transaction privacy. When a property is held in an LLC, the transaction does not appear in the public registry under the client’s personal name. A homestead deed gets recorded at the Puerto Rico registry by a notary and becomes public record. An LLC-held property does not publicly disclose the individual owner. For HNW clients who value privacy — and most of mine do — this is a significant benefit.

Option 3:An Emerging Institutional Lending Alternative

There is a new development in the Puerto Rico market that I want to make advisors aware of. I have a direct relationship with the leadership of a digital bank operating on the island with approximately $450 million in assets. They are actively developing lending products designed specifically for Act 60 luxury real estate purchases.

These products are structured as commercial business lines of credit secured by the property — not traditional residential mortgages. The terms are similar to seller financing: 40-50% down with interest-only terms. The underwriting criteria and documentation are different from mainland residential lending.

Why this matters for advisors: for the first time, there is an institutional lending option that does not depend on a willing seller to carry financing. This opens the market for clients targeting properties where the seller wants the full purchase price at closing and will not negotiate seller financing terms.

How Advisors Add Value in the Transaction Planning Process

Here is the framework I recommend advisors use when helping clients think about the property purchase:

1. Evaluate the opportunity cost of cash deployment. If your client’s capital is generating 12-15% annual returns in their business or portfolio, deploying $10 million into a home while seller financing is available at 7.65% may not be the optimal allocation. The preserved capital earns more than the financing costs. That is an analysis the advisor is uniquely positioned to run.
2. Coordinate timing with the tax transition. The source and timing of funds used for the purchase can have tax implications depending on when the client establishes Puerto Rico residency. The advisor, CPA, and Act 60 attorney should coordinate on this.
3. Understand the balloon payment obligation. Seller financing comes with a three-to-five-year balloon. The advisor should ensure the client has a clear plan for that payment — whether from anticipated capital events, portfolio rebalancing, or refinancing through the emerging digital banking options.
4. Factor in the LLC benefits. The 1% luxury tax savings and the privacy benefits of LLC ownership are real advantages. The client’s attorney structures the LLC. The advisor should understand these benefits exist so they can be factored into the total cost analysis.

The bottom line: the absence of traditional mortgage financing in Puerto Rico is not a limitation for your client. It is an opportunity for you to add value by helping them evaluate which transaction structure optimizes their capital deployment, their tax position, and their privacy simultaneously.

As Always: This Is the Law

The transaction structures I described above — cash purchases, seller financing, LLC ownership — are all legitimate, well-established mechanisms used routinely in Puerto Rico luxury real estate. There is nothing aggressive, creative, or novel about any of them. The LLC structures in particular are standard practice on the island and are supported by Puerto Rico’s corporate and property law framework.

Your client’s attorney will structure the transaction to comply with all applicable laws. Your role is to understand the options well enough to help your client make an informed capital allocation decision. And that is exactly what this series is designed to help you do.

Continue the Conversation

If you want to discuss specific transaction structures, current market pricing, or how the capital deployment side of an Act 60 property purchase typically works in practice — I am happy to share what I see from the real estate side.

FAQS:

1. How are luxury real estate purchases typically financed in Puerto Rico?

Most high-end purchases in markets such as Dorado Beach are completed with cash or alternative structures such as seller financing, rather than conventional jumbo mortgages. The appropriate structure depends on the buyer’s liquidity, investment objectives, and legal and tax circumstances.

2. What is seller financing in a Puerto Rico luxury real estate transaction?

Seller financing allows the property seller to finance part of the purchase price instead of the buyer obtaining a traditional mortgage. A common structure may involve a 40–50% down payment, an interest-only payment period, and a balloon payment at the end of a three-to-five-year term. Specific terms are negotiated between the parties and should be reviewed by qualified legal and financial professionals.

3. Can purchasing Puerto Rico luxury real estate through an LLC provide tax or privacy benefits?

An LLC may provide certain ownership, privacy, and transaction-structuring benefits, depending on the circumstances. The article describes potential savings related to Puerto Rico’s luxury property tax and the ability to hold property without recording the individual buyer’s name in the same manner as a personal deed. Buyers should have their Puerto Rico attorney and CPA confirm the applicable tax, legal, and reporting consequences before selecting an LLC structure.

4. What should wealth managers consider before a client purchases luxury real estate in Puerto Rico?

Wealth managers should evaluate the opportunity cost of deploying cash, coordinate the purchase with the client’s residency and tax planning, assess any seller-financing balloon obligation, and consider the client’s overall liquidity strategy. The real estate transaction should be coordinated with the client’s CPA and attorney so that investment, tax, and legal decisions are evaluated together.

About Christian Kleiner

Christian Kleiner is the Founder & CEO of Christian Kleiner Luxury Real Estate, Puerto Rico’s premier luxury real estate brokerage specializing in Act 60 relocation and Dorado Beach luxury properties. A full-time Dorado Beach resident with over 32 years of real estate experience, Christian structures luxury real estate transactions across the full spectrum of available options in the Puerto Rico market. He has been featured in Mansion Global, The New York Post, and Yahoo Finance and was a featured speaker at the 2026 Uncorrelated Alts Conference in Puerto Rico.