Financial Advice for Retirement, Social Security, IRAs and Estate Planning

Puerto Rico As A Tax Haven for Wealthy Retirees

Published on: Sep 25 2018

Puerto Rico became a popular hurricane for some fairly wealthy U.S. residents after Hurricane Maria. This article explains the tax rules and profiles some of the people who decided to take up residence on the island to save a lot of money.

To comply with Act 22, Nissman said, it all came down to what everyone called “making days.” If you spent fewer than 183 days a year on the island, the feds could recoup all the taxes you hadn’t been paying. The good news was that there were a lot of ways to obey the letter, if not the spirit, of the law. There was the “one minute” rule: A single minute on the island counts as a full day, as far as the IRS is concerned. You can touch down your Learjet, get a receipt at the airport Starbucks, then continue on to the Virgin Islands for dinner. The local government could be accommodating as well: In 2017 all Puerto Rican tax exiles got a 117-day “award” due to Maria.

A Puerto Rican–born lawyer specializing in Act 22 compliance, who asked for anonymity to speak about his work, told me that he no longer represents clients seeking to relocate because “people were taking advantage.” He described a prospective Act 22 recipient saying, “ ‘I’ll take my private jet and fly down; then I’ll take my boat and go somewhere else. They won’t know.’ ”

 

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