Understanding the Source of Income: Texas vs. Puerto Rico
Capital Gains: Pre-Move Appreciation from Dallas
Navigating the Bona Fide Residency Requirements
Frequently Asked Questions
Since Texas has no state income tax, what's the main tax benefit of moving to Puerto Rico?
The primary benefit is the reduction of federal income tax on Puerto Rico-sourced income. Under Act 60, this income can be taxed at a 4% corporate rate, and dividends paid to you as a resident are 100% tax-exempt. This is a significant advantage over the top federal income tax rates in the US.
How does Act 60 affect my existing investments from when I lived in Dallas?
Appreciation on investments that occurred before you became a bona fide resident of Puerto Rico is subject to US capital gains tax if sold within 10 years of your move. Only appreciation that occurs after you establish residency qualifies for the 0% rate under Act 60. Our review can help you properly allocate these gains.
Is the 183-day rule the only thing I need to worry about for residency?
No, the 183-day presence test is just one of three requirements. You must also not have a tax home outside of Puerto Rico and must have a closer connection to Puerto Rico than to the US. Our comprehensive review is designed to ensure you meet all facets of the bona fide residency test.
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This content is for informational purposes only and does not constitute tax, legal, or accounting advice.