The Tax Cuts and Jobs Act passed by Congress in late 2017 created a new tax incentive program called the Opportunity Zone program, which has the power to transform real estate investments. Through this program, those who invest realized capital gains into qualified Opportunity Funds may defer and significantly reduce their capital gains tax liability, and potentially pay zero taxes on earnings from their Opportunity Fund investments altogether.

 

An opportunity zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as opportunity zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service. Puerto Rico was announced as Federal Opportunity Zone by Governor Rosello on April 18, 2018.  U.S. Code Section 1400Z-1(b)(3) created a special rule for Puerto Rico, making practically the entire island an opportunity zone.  As such, Puerto Rico has 863 designated opportunity zones, including 837 low-income communities, plus 26 non-low-income contiguous tracts.

 

Puerto Rico expects these incentives to inject millions in new investments into the island's economy, and a significant increase in small and medium size business creation and the creation of employment to support these new enterprises and investments. The creation of these new enterprises, will have a trickle effect in the overall island's economy, culminating in a significant reduction of Federal Government economic social engineering programs.

 

Unfortunately, 1031 Exchanges are not possible in Puerto Rico, but may be converted into a Qualified Opportunity Zone (QOP) Fund.  To learn more about this program, its benefits and how to create a fund, or convert your 1031 Exchange into a QOP fund to purchase real estate contact your CPA or Tax Professional.

 

The Bonus of Investing in Puerto Rico:

• Awesome weather, Puerto Rico has been a perennial vacation destination.

• No passport required.

• Nearby, a short hop. New York to San Juan is easier than, New York to Los Angeles.

• The people, a well-educated work force.

• Beach or Mountains, you choose.

• Act 20 / 22 benefits

• Puerto Rico is a Commonwealth of the U.S.

• Goods and services similar to the United States.

• Our own special and unique culture, a blend of Latin America with the U.S.