The Puerto Rico Tax Haven (Act 60): How to Pay 0% Capital Gains Tax Legally
The Puerto Rico Tax Haven (Act 60): How to Pay 0% Capital Gains Tax Legally
CORE INSIGHTS
- 0% Capital Gains: Act 60 allows new residents to pay 0% tax on capital gains realized after moving. This applies to crypto, stocks, and businesses.
- The Trade-Off: You must live in PR for 183 days/year and sever ties with the mainland. The IRS audits this aggressively.
- Split Treatment: Gains accrued before moving are still taxed by the US. Only the new growth is tax-free. You need a valuation on moving day.
For US citizens, there is no escape from the IRS—except one. Puerto Rico offers a unique tax code where you can legally pay 0% on gains without renouncing citizenship. For crypto whales and founders exiting for millions, this is the ultimate geographic arbitrage.
What-If Scenario: The $10 Million Exit
| Location | Tax Rate | Net Wealth |
|---|---|---|
| California | 37.1% (Fed+State) | $6.29 Million |
| Puerto Rico | 0% | $10.00 Million |
Visualizing the Tax Savings
*Figure 1: Net Proceeds. The Puerto Rico advantage (Green) is massive for high-income exits.*
Strategic Action Steps
1
The 183-Day Count
You must physically be in PR for at least half the year. Keep flight logs and receipts. This is the first thing the IRS checks.
You must physically be in PR for at least half the year. Keep flight logs and receipts. This is the first thing the IRS checks.
2
Sever Old Ties
Sell your US home, move your bank, doctor, and voting registration. You must prove your “center of life” has shifted.
Sell your US home, move your bank, doctor, and voting registration. You must prove your “center of life” has shifted.
3
Pay the Fee
To keep the decree, you must donate $10k/year to local charities and file an annual report ($5k fee). Small price for millions saved.
To keep the decree, you must donate $10k/year to local charities and file an annual report ($5k fee). Small price for millions saved.
The Bottom Line: Who Should Choose What?
- Move to PR: Crypto traders or founders expecting >$500k gains who are mobile.
- Stay in US: W-2 employees (cannot use Act 60 for wages) or those with strong family ties.
Frequently Asked Questions
Do I have to renounce US citizenship?
No. Puerto Rico is a US territory. Income sourced within PR is exempt from US Federal Tax under IRC 933.
What is the catch?
The residency test is strict. You cannot fake it. You must actually live there and contribute to the local economy.
Does it apply to old gains?
No. Gains from before you moved are taxable. Only appreciation after becoming a resident is tax-free.
Disclaimer: This content is for informational purposes only. Act 60 rules are complex. Consult a PR tax attorney.