Puerto Rico Capital Gains Tax: 2025 Guide for U.S. Island Investors
Quick answer—does Puerto Rico have capital gains tax?
Yes. Standard long-term gains are taxed at a flat 15%, while short-term gains are folded into Puerto Rico’s ordinary income brackets (0%–33%). If you become a bona-fide resident under Act 60 you can cut the rate to 0% on post-move gains—potentially the biggest legal CGT break available to U.S. citizens.
Short-Term Capital Gains Tax in Puerto Rico
Short-term gains are tacked onto your regular taxable income. The 2025 brackets run from 0% on the first $9,000 of net income up to 33% above $61,500.
Long-Term Capital Gains
For assets held longer than a year, the default rate is 15%, payable to Hacienda (the Puerto Rico Treasury). U.S. federal CGT does not apply once you are a bona-fide PR resident, because Section 933 of the Internal Revenue Code excludes Puerto Rico-sourced income.
Act 60 Resident Investor Incentive (Former Act 22)
Item | Current rule | Pending 2025 update* |
Post-relocation gains on stocks, crypto, real estate & other capital assets | 0% PR tax for the life of the decree | 4% fixed rate for new applicants beginning 2026 (House bill not yet enacted) |
Pre-move unrealized appreciation | 10% if sold after 10 yrs of residency; 5% if sold after 15 yrs | No change announced |
Decree term | To 2035 (existing decrees) | Extension proposed through 2055 |
*Status as of June 2025. Monitor Hacienda guidance before applying.
Establishing Puerto Rico Tax Residence
To pay PR—not U.S.—capital-gains tax, you must pass the three-part “bona fide resident” test each year: Presence + Tax-Home + Closer-Connection.
Presence Test – Spend ≥183 days physically in Puerto Rico or satisfy one of four alternative day-count formulas. Travel days to/from the island count as PR days.
Tax-Home Test – Your principal place of business (or regular abode if no business) must be in Puerto Rico all year.
Closer-Connection Test – Stronger personal, social, and economic ties to PR than to any other location (voter registration, driver’s license, primary residence, family location, banking, etc.).
Compliance checklist
Task | Why it matters |
Track day count (spreadsheet, phone GPS logs) | IRS audits focus heavily on travel records. |
Form 8898 to the IRS when you begin or end PR residency | Mandatory if worldwide income > $75k. |
Open local bank accounts & update voter/driver records | Helps satisfy Closer-Connection. |
Lease or buy a primary home on the island | Supports both Tax-Home & Closer-Connection tests. |
File PR return (Form 482 + 480 series informatives for gains) | Hacienda requires 480.6A/6C for capital-gains reporting. |
Puerto Rico vs Mainland U.S. Capital-Gains Rates (2025)
Scenario | Short-Term | Long-Term |
U.S. (federal) | Ordinary income brackets up to 37% + 3.8% NIIT | 0%, 15%, 20% (+ NIIT) |
Puerto Rico (regular) | 0%–33% | 15% flat |
Puerto Rico Act 60 | Still 0%–33% on pre-move short-term income | 0% on post-move gains (4% for new decrees starting 2026) |
Filing & Payment Logistics
Puerto Rico returns: Form 482 is due on April 15th (six-month extensions are available).
Informative returns: Brokers or taxpayers issue Form 480.6A/6C by February 28th to report gross capital gains and any withholding.
U.S. return: Bona-fide residents still file Form 1040 but generally exclude Puerto-Rico-sourced gains under IRC §933; other worldwide income remains subject to federal tax.
Special Situations
Crypto & NFTs – Treated as property; gains follow the same short-/long-term and Act 60 rules. Keep blockchain transaction logs with crypto tax software to make reporting easy and accurate.
Real estate held <10 yrs before move – Pre-move appreciation generally taxed at 10% when sold.
Qualified Opportunity Fund roll-overs – PR has its own QOF statute; U.S. deferral doesn’t automatically apply.
Two Real-Life Examples
Case | Facts | Result |
Act 60 crypto investor | Moves on January 1st, 2023, buys ETH at $1,200, sells at $4,000 in 2025. | 0% CGT (gain arose after residency.) |
Seasonal trader | Spends 120 days/yr on island, trades from Florida rest of year. | Fails Presence & Tax-Home tests → U.S. CGT applies at federal + state rates. |
FAQs
Does Puerto Rico tax short-term gains differently from the mainland? Yes. Short-term gains slot into PR’s 0%–33% income brackets, which top out lower than U.S. 37%.
Can I keep my Delaware LLC and still qualify? Possibly, but your principal place of business must shift to Puerto Rico to meet the Tax-Home test.
Do I owe both U.S. and PR tax? Not on Puerto-Rico-sourced gains once you clear the bona fide resident hurdles; other worldwide income may remain taxable federally.
Is the 0% Act 60 rate guaranteed forever? Decrees last through 2035 under current law, but legislation before the PR House would replace the 0% with 4% for newcomers starting in 2026.
What if I leave the island for a year? If you fail any part of the residency test, all your income reverts to U.S. taxation for that year, and you must file Form 8898 to notify the IRS.
Bottom Line & Next Steps
Puerto Rico’s 15% long-term capital gains tax rate and the potential 0% under Act 60, can slash capital-gains bills for investors willing to relocate and truly make the island home. But the savings hinge on meticulous day-count tracking, genuine economic ties, and correct filing of both Hacienda and IRS forms.
Thinking about the move? Start by logging every travel day, opening local bank accounts, and modeling scenarios with tax software like Awaken Tax to confirm whether the switch puts you ahead after housing, healthcare, and relocation costs.
Related Reading
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