Tax-Free Income – Law to Incentivize Property Acquisition

Puerto Rico Law 132 of 2010, also known as the “Law to Incentivize Property Acquisition and Promote the Construction Industry in Puerto Rico,” was enacted with the purpose of stimulating investment in property acquisition and promoting the development of the construction industry on the island. Here are its key points:

  1. Income Tax Exemption: One of the most significant provisions of this law is the exemption from income taxes for certain types of income derived from properties. Specifically, Law 132-2010 exempts income from the rental of newly constructed properties and qualified residential properties from income taxes for a specified period.
  2. Period of Effectiveness: This income tax exemption was in effect from January 1, 2011, to December 31, 2020. During this period, property owners who rented out qualified properties could benefit from this tax exemption.
  3. Eligibility Requirements: To qualify for the exemption, the property had to meet certain criteria, such as being newly constructed or meeting the specified qualifications for a qualified residential property as established by the law.
  4. Reporting on Tax Return: Despite the exemption, owners of qualified properties were still required to report rental income and related expenses on their tax returns, using a specific form and marking the checkbox corresponding to Law 132-2010.

It’s important to note that tax laws are subject to changes and revisions, and the information regarding this law may have evolved since its period of effectiveness. Therefore, it is essential to consult with an updated tax advisor in Puerto Rico for accurate guidance on how this law may affect your tax situation.

I hope this article was helpful. Is there anything else I can help you with? Feel free to reach out at [email protected] or 787-473-8985.

Disclaimer: The information provided on this website is for informational purposes only and is not legal or tax advice. You should consult with a qualified attorney or tax advisor to discuss your specific situation.

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