What’s not to like about lower taxes and island living?
Influx of Bitcoin Millionaires to Puerto Rico
More and more crypto-wealthy Americans have been fleeing mainland states and flocking to the US territory of Puerto Rico.
In addition to gorgeous beaches and island living, Puerto Rico offers huge crypto-friendly tax policies to Americans who live on the island a minimum of 183 days each year. These Americans don’t have to relinquish their US passports AND they able to skip paying any capital gains taxes.
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Once such newbie to Puerto Rico, David Johnston, a member of the crypto ecosystem since 2012, told CNBC, “That’s (Puerto Rico) where all my friends are. I don’t have one friend left in New York (as well as many California friends), and maybe the pandemic accelerated this, but every single one of them has moved to Puerto Rico…That’s where my community is. That’s where the people I know and love are going, and they’re going there to build something cool. Something that helps everyday people, and that’s what I love about open source. That’s what I love about blockchain. It’s open to everybody.”
Tax Savings in Puerto Rico a Huge Draw
Conjured up a decade ago to help bring people and cash to the island, the Puerto Rican government instituted what some call “almost-too-good-to-be-true” tax-friendly policies to incentivize American individuals and businesses to move to its US territory-island.
Act 60, known as the Individual Investors Act, cuts state-side short-term capital gains of 37% and up to 20% on long-term gains held for more than a year to 0% on gains earned after becoming a Puerto Rican resident. Even if the investor has a certain amount of gain, CPA Shehan Chandrasekera told CNBC that the investor can establish residency in Puerto Rico, sell their stake and then buy back that stake as a new position. Act 60 applies to non-Puerto-Rican entrepreneurs and crypto traders, not locals.
For business owners who set up their businesses in Puerto Rico and export their services to the US or anywhere else outside of Puerto Rico, they pay a corporate tax rate of 4%. Any mainland or state-side business, on the other hand, is subject to a 21% federal corporate tax plus a state tax.
All of this “tax-friendliness” in Puerto Rico (cutting 37% on short term and up to 20% on long-term capital gains to zero and cutting corporate tax from 21% to 4%) makes moving and setting up shop in Puerto Rico sort of a no-brainer, right?
Flood of Crypto Rich to Puerto Rico Helped Real Estate Prices Skyrocket
Since many crypto investors and businesses have been moving to Puerto Rico since the bull run on bitcoin in 2017, real estate prices have gone through the roof.
According to Francisco Diaz Fournier with Luxury Collection Real Estate, “The lack of inventory and high demand has resulted in prices that we have never seen before in Puerto Rico…You have properties in Dorado Beach that have sold for more than $20M.”
Other properties currently on the market have listing prices of $27M, $30M and $34M…prices that are becoming almost expected. And buyers for these properties are not only crypto-rich buyers. Other buyers have included those who have and/or are generating their wealth via real estate and other entrepreneurial ventures.
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Other Tax-Safe Havens via Plan B Passport
Puerto Rico does not have the exclusive market on tax safe havens. Plan B Passport offers tax saving benefits to its “passport” holders in other island paradises such as St. Kitts and Nevis, Antigua and Barbuda, Dokinica, Vanuatu, Grenada, Santa Lucia and Portugal. “Donors” pay an average of $130,000 to $180,000 into a country’s sustainable fund to live essentially tax free.
Thanks to CNBC.
