Taxes, Licenses, Insurance & Utilities
Taxes, one of life’s certainties . . .Capital Gains INCENTIVE:
Take advantage of the extraordinary tax incentives offered on property purchased from now until until June of 2011
- No long-term capital gain tax on seller upon sale during the elegible time period
- 50% reduction on long-term capital gain for buyer upon future sale
- Increase in deductible capital loss amount for individual taxpayers from $1,000 to $5,000; and extended carry forward period from 5 to 15 years
- 50% exemption for seller and purchaser on transfer fees (stamps and vouchers)
- No stamps and voucher fees on cancellation of mortgage debt
- Rental income from residential properties is also tax exempt for 10 years
Property taxes here are LOW….we are still assessed at 1957 values and the rate is less than $10/$1000. Full time residents also get a Homestead Exemption . . . and Vets get a further exemption. No wonder the government is broke! But, instead of adjusting this, the government has instituted a sales tax and are after various other means of getting money by enforcing some laws previously not enforced, instituting Tourism taxes and pursuing tax evaders including vacation rental home owners. Hacienda just instituted an “emegency/special tax” which effectively doubles property taxes on 2nd homes (still minor $). Hopefully this will all “shake out” and make some sense . . . and help the Government get into the black at some point. ARPE is being dissolved along with a major overhaul of all requirements for permits and licensing . . . probably for the best. But again . . . some critical issues have been raised including requirements for developments and community participation in approvals. We hope to have more info on the new agency that will take ARPE’s place, very soon . . . and we will post it when it happens.
ON THE RENTAL FRONT:
ALL rental house owners need to get a PATENTE (Municipal License) to do business and are required to register with the Government for the new sales tax . . . it DOES NOT (our understanding) apply to you, but you are still required to register, unless you run all rentals through a licensed and registered agency (like Rainbow Realty!)
. . . ALSO,
We at Rainbow handle the 7% TOURISM TAX imposed on the guests we rent to. BUT, if you do your own rentals, you must register with the Government and Tourism and the Municipality and pay this tax on the rentals YOU do. Also, there is a Health Department and Fire Inspection that is required if you rent your home on a short term basis (under 3 mos). Long term rentals (over 3 mos) forgo all these requirements . . . so far . . .
You MUST pay local income tax . . . to be strictly enforced . . . and it IS the right thing.
HOMEOWNER’S INSURANCE can be acquired. We have resources for our home buyers. It’s NOT that expensive even with hurricane and earthquake coverage. Contents coverage may be high due to some problems with theft. Wood houses ARE expensive to insure. IF you have a mortgage, the bank will provide for a policy to cover the MORTGAGE ONLY . . . so, if you want full coverage, you must add on!
UTILITIES–Electric and water can be transferred right on island with a copy of your deed. It is helpful to have a copy of the utility bill when you go to the offices. Electric is next to Chu Garcia’s and Water has moved to Florida near our Tues/Weds Farmer’s Market in one of the warehouses. Deposits of less that $100 are required for each for residential accounts/more for commercial. Phone service is almost impossible to transfer . . . it is just easier to cut service and order new service.
CELL PHONES . . . most now work here. There is some WiFi available in town/Air Cards work all over and DirecTV now offers a wireless service in conjuction with TV service. There is DSL offered on the North side of the island and mid-island only and, of course, there’s good old Dial-Up . . . all with PRT. There is a new satellite service just starting up . . . Aero? We have info . . .
PR CAPITAL GAINS TAX must be paid on real estate sales WITH THE exception OF THE MORITORIUM (POSTED ABOVE!). RIGHT NOW there is an incentive to BUY/SELL – no Capital Gains tax on property purchased from now until June 2011!!! Normally, residents pay in April with regular income taxes . . . BUT, non-residents have a withholding imposed at closing. We at Rainbow Realty make this VERY easy . . . no reason for it to be complex. We work with the 2 accountants who can be of assistance to you through the process . . . it is relatively painless with the system we have developed. Residential is normally 10% of the GAIN (difference between what was originally paid, and what it’s currently selling for, MINUS improvements). Corporate Taxes vary, normally 12.5%.
The tax exchange most of us are familiar with (IRSC 1031), IS NOT VALID HERE . . . FACT! We do not pay Federal Taxes here, so it does not work.
Brokers and the Law
Financing & Mortgaging
Help US, help YOU !
Legal Blog good reference !
Legal Stuff, Closings & Inheritance
Monte Carmelo Titles?
Mortgages in PR…
New Information Source !
NO MORE CAP GAINS TAX INCENTIVE….
Puerto Rico Luring Buyers With Tax Breaks
Real Estate Stimulus ENDED
Taxes, Licenses, Insurance & Utilities
Titled vs “Untitled” (Un-Registered Title)
Two other SALES CLOSED recently…
VILLA BORINQUEN TITLES ! YES!