Puerto Rico is becoming an increasingly popular destination for Americans looking to relocate, primarily for tax reasons.
Although the island boasts promises of financial incentives aimed at attracting investors and entrepreneurs, the move brings challenges, including: difficulty navigating the complexities of the healthcare sector, education, and even purchasing goods like furniture.
From 2021 to 2022, about 27,000 people moved from the continental United States to the island of Puerto Rico (remember that Puerto Rico is a U.S. territory), according to data collected by the US Census Bureau. The tax incentive in the territory, Law 60, is a major draw for many.
Any American who establishes residency in Puerto Rico can apply for a 15-year decree under Law 60. That is, if approved, the individual or company will only have to pay a fixed rate of 4% on income (income tax) and may receive a 75% reduction in property taxes.
Additionally, people do not have to pay any taxes on accumulated wealth, and companies benefit from a 50% reduction in municipal license taxes.
The Challenges
One of the biggest challenges for families with young children is finding the right school. There are several well-rated bilingual schools on the island (English and Spanish are official languages on the island), but they are struggling to cope with the growing population, especially in areas considered more desirable for those coming from the mainland.
One such area is Dorado, a town about 32 kilometers west of San Juan, on the northern side of the island, where many of the more expensive homes are being built. While a family may find the home and community they desire in that area, if there is no availability at the local school, children may be forced to travel 35 to 40 minutes to reach a school in San Juan.
Another major issue that people need to consider before moving to Puerto Rico is the state of the healthcare system. If you need a specialist on the island and find one, you will have to wait a long time for an appointment. Often, it will be necessary to fly to Miami or New York to obtain the necessary care.
Puerto Rico was already in a “health crisis” in 2015, and the situation worsened in the following three years. In the year following Hurricane Maria, in 2017, about 15% of healthcare professionals in Puerto Rico left the island, Vox reported, citing data from the Puerto Rico College of Physicians and Surgeons.
Local and federal governments are working to improve healthcare in the region.
The Attraction of Tax Incentives Drives Up Real Estate Prices
As Puerto Rico is a U.S. territory, residents from the mainland can purchase real estate on the island without any restrictions. But the influx of people has been affecting the island’s high-end real estate market.
Five years ago, builders were focused on homes that ranged from $2 million to $4 million. Now, they are creating homes that cost between $20 million and $40 million.
Of course, there are areas where housing is more affordable. But before moving, the suggestion is to spend an extended vacation to see if the island is indeed the right destination for the family.
Source: Business Insider