How to Navigate Act 60 Tax Incentives When Moving to Puerto Rico (2026 Guide)
Relocating to Puerto Rico is no longer just about sunshine and ocean views. For U.S. investors, entrepreneurs, and high‑net‑worth individuals, Act 60 has become one of the most powerful wealth‑preservation tools available today.
But navigating Act 60 correctly requires more than a surface‑level understanding. In this guide, we break down how Act 60 works, who qualifies, what mistakes to avoid, and how to structure your move properly—so you protect your lifestyle and your capital.
What Is Act 60? (Puerto Rico’s Tax Incentive Explained)
Act 60, officially known as Puerto Rico’s Incentives Code, consolidates multiple tax incentive programs into one framework designed to attract new residents and businesses to the island.
For eligible individuals, Act 60 can offer:
0% tax on capital gains generated after becoming a resident
0% tax on Puerto Rico–sourced dividend income
0–4% corporate tax for qualifying export services
Favorable estate and inheritance planning opportunities
These incentives apply only after you establish bona fide residency and meet all compliance requirements.
Who Qualifies for Act 60?
Act 60 is designed for individuals who were not Puerto Rico residents before their relocation.
Typical qualifying profiles include:
Entrepreneurs and founders
Investors and traders
Crypto holders
Consultants and service providers
Executives with remote or portable income
Business owners with U.S.-based clients
You must demonstrate that Puerto Rico becomes your primary tax home, not a secondary residence.
The 3 Legal Residency Tests You Must Pass
To qualify under Act 60, you must satisfy all three IRS residency tests:
1. The Physical Presence Test
Spend at least 183 days per year in Puerto Rico
Or meet alternate day-count formulas approved by the IRS
2. The Tax Home Test
Your main place of business must be Puerto Rico
Management, operations, and decision‑making should occur on the island
3. The Closer Connection Test
Stronger personal, financial, and social ties to Puerto Rico than to the mainland U.S.
Includes banking, driver’s license, voter registration, home ownership, and community involvement
Failing any one of these tests can jeopardize your Act 60 benefits.
Why Real Estate Is a Core Part of Act 60 Compliance
Owning or leasing property in Puerto Rico is not technically mandatory—but in practice, it is one of the strongest indicators of bona fide residency.
High‑net‑worth relocators typically focus on:
Luxury primary residences
Gated communities
Beachfront or resort‑style developments
Properties near private schools, golf, marinas, or business hubs
Choosing the right property strengthens your residency case while aligning with your lifestyle goals.
Common Mistakes People Make with Act 60
Many applicants fail not because Act 60 is difficult—but because they misunderstand it.
The most common mistakes include:
Buying property before understanding residency requirements
Spending insufficient time on the island
Keeping too many personal ties in the mainland U.S.
Improperly sourcing income
Not coordinating CPA, attorney, and real estate strategy together
Act 60 works best when it’s executed as a holistic relocation plan, not a tax shortcut.
How the Application Process Works
The Act 60 application process typically includes:
Filing the Act 60 application with Puerto Rico’s Department of Economic Development
Background checks and compliance disclosures
Approval and issuance of tax decree
Ongoing annual compliance filings
Approval timelines vary, but most well‑prepared applicants are approved within a few months.
How WoodsLux Supports Act 60 Relocators
At WoodsLux, we work with Act 60 clients beyond just property searches.
Our private clients receive support with:
Strategic neighborhood and property selection
Introductions to Act 60 CPAs and legal advisors
Residency‑aligned home acquisition
Long‑term investment planning
Concierge services before and after relocation
We understand that Act 60 is not just about taxes—it’s about designing a smarter life structure.
Is Act 60 Still Worth It in 2026?
Yes—but only if done correctly.
Puerto Rico continues to refine enforcement and compliance, which makes professional guidance more important than ever. Those who plan properly benefit from long‑term stability, lifestyle elevation, and legitimate tax efficiency.
Act 60 is one of the most attractive relocation incentives available to U.S. citizens—but it rewards precision, not shortcuts.
If you’re considering a move to Puerto Rico, your real estate, tax, and lifestyle decisions should be aligned from day one.
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