What Is Act 60?
Act 60 (the Puerto Rico Incentives Code, which folded together the older Acts 20 and 22) offers eligible new residents sharply reduced taxes: a 4% corporate tax rate for qualifying export-services businesses, and – for individual “resident investors” who relocate to the island – 0% tax on Puerto Rico–sourced capital gains, interest, and dividends earned after establishing bona fide residency. Recent 2025–2026 reforms extended the program through 2055 but tightened it: applicants after December 31, 2026 face a new 4% tax on capital gains and investment income, plus stricter annual reporting, certified CPA letters, and higher required charitable contributions.
Whether the program is good for Puerto Rico overall remains genuinely contested — five experts weigh in with sharply different views.”
Who Qualifies
| Requirement | Detail |
|---|---|
| Bona fide residency | Must live in Puerto Rico at least 183 days per year |
| Not a former PR resident | Generally must not have been a Puerto Rico resident for the 10 years prior to the law’s original passage (2012) |
| Property purchase | Must buy Puerto Rico residential real estate within the first two years of the decree, in most current versions of the program |
| Annual charitable giving | Required annual donation to a Puerto Rico nonprofit – the amount has increased in recent reforms |
| U.S. citizens only benefit fully | Because the tax exemption applies to income that would otherwise be taxed by the IRS, the incentive is specifically attractive to mainland U.S. citizens and residents |
Expert Perspectives
Based on Stanford University’s STORM research, here are five expert perspectives on Act 60 and the wealth migration reshaping Puerto Rico’s housing market. None of these views is “the truth” – each sees a real part of the picture the others miss. We recommend you read all five before forming your own conclusions.
The Practitioner – Relocation & Tax Attorney
Core Position
Act 60 is a demanding legal instrument, not a simple tax break – most people who fail at it fail on paperwork and residency tracking, not tax strategy. The public debate argues about policy while practitioners spend their days on day-counts, decree renewals, and audit defense.
Strongest Evidence
The IRS has increased scrutiny and enforcement actions against Act 60 residents who claim bona fide residency without actually meeting the 183-day physical-presence test, and 2026 program reforms now require certified CPA letters and detailed annual reporting – a direct response to widespread noncompliance practitioners were already seeing.
Perspective
The tax rate is the least interesting part of Act 60. The real risk is retroactive disqualification: applicants who don’t rigorously log flight records, utility bills, and physical presence can lose the entire exemption years later in an audit – with back taxes and penalties few “how to move to Puerto Rico” articles ever mention.
The Academic – Economist / Urban Studies Researcher
Core Position
Peer-reviewed and institutional data suggest the housing story is more localized than either side’s headline claims. Decree holders are a small share of all island home sales overall, but a dominant share of sales in specific luxury submarkets – meaning “Act 60 caused the housing crisis” and “Act 60 has no housing effect” are both oversimplifications of the same dataset.
Strongest Evidence
Research from Puerto Rico–focused economic institutes shows decree holders concentrate heavily in a small number of zip codes – Dorado, Condado, Palmas del Mar, Rincón – where they represent a large share of high-end purchases, while their footprint in the broader residential market elsewhere on the island is comparatively minor.
Perspective
Puerto Rico doesn’t have one housing market – it has at least two: a small, internationalized luxury/coastal market Act 60 has visibly reshaped, and a much larger general market driven mostly by local wages, insurance costs, and construction supply. Treating them as a single market, as most news coverage does, produces statistics that technically aren’t wrong but are structurally misleading.
The Skeptic – Contrarian on Both Narratives
Core Position
Act 60 is a symptom, not a root cause, and both its defenders and its critics overstate its importance. Puerto Rico’s population decline, debt crisis, and economic contraction all predate the 2012 law by years – pinning the island’s affordability crisis on roughly 27,000 relocatees ignores decades of zoning, permitting, and short-term-rental policy failures.
Strongest Evidence
Puerto Rico’s population has been declining since 2004 – eight years before Act 60/22 existed – and the island’s 2016 debt default and subsequent federal PROMESA fiscal oversight board reshaped its economy far more broadly than any tax-decree program has.
Perspective
Repealing Act 60 tomorrow would not fix housing affordability. The mechanisms actually driving up prices – restrictive construction permitting, unregulated short-term rental conversion, and municipal zoning inertia – would still be fully intact. Act 60 is an easy villain because it’s visible and new; the boring bureaucratic causes are neither.
The Economist – Follows the Money
Core Position
Nearly every institution publishing on Act 60 has a financial stake in the conclusion it reaches. The Puerto Rico government markets the program as economic development; a cottage industry of relocation consultants, CPA firms, and boutique real estate brokers profits from applications; and advocacy nonprofits opposing it rely on the controversy for their own funding and visibility.
Strongest Evidence
Government-affiliated bodies like InvestPR actively promote Act 60 to prospective decree holders as an investment-attraction tool, while an entire ecosystem of relocation “concierge” services, tax law firms, and luxury real estate brokerages (many named directly after the program) earn commissions and fees exclusively from Act 60 applicants.
Perspective
Before trusting any “economic impact of Act 60” statistic, check who funded it. Pro-Act 60 studies are frequently commissioned or amplified by firms that earn fees from applications; anti-Act 60 research is often funded by housing and tenant-advocacy organizations competing for the same donor and media attention. Neither is automatically wrong – but neither is neutral, either.
The Historian – Pattern Recognition
Core Position
This isn’t Puerto Rico’s first tax-incentive wave, and the “capital flows in, people flow out” pattern has precedent on the island itself. Operation Bootstrap (Manos a la Obra), launched in the 1940s under the 1947 Industrial Incentives Act, used tax exemptions to draw mainland manufacturing capital to Puerto Rico – and coincided with one of the largest waves of Puerto Rican emigration to the U.S. mainland in history.
Strongest Evidence
Operation Bootstrap’s tax-exemption strategy successfully industrialized Puerto Rico’s economy in the mid-20th century, but the same decades saw hundreds of thousands of Puerto Ricans leave for the mainland as the island’s traditional agricultural economy was displaced – a documented case of an incentive program reshaping who lives on the island, not just what the island produces.
Perspective
Watch the second-order effect, not the headline one. Every past round of Puerto Rican tax-incentive policy changed the island’s population composition as much as its economy – and that demographic reshaping, more than the tax revenue itself, is usually what people are remembering decades later when they debate whether the program “worked.”