Sales of Puerto Rican luxury houses and condominiums are spiking during the pandemic, with buyers from New York, California and other higher-tax states embracing the island’s low-tax status.
Developers of luxury projects are reporting increasing sales volume and prices compared with 2019. The uptick comes despite years of natural disasters and financial and political upheavals that made many wary of buying property in Puerto Rico.
Residents of the territory—who must live there at least 183 days a year—pay a Puerto Rico income tax of up to 33% but no other federal or local income taxes. Many wealthy individuals also are exempt from taxes on interest, dividends and certain capital gains.
Some U.S. cities or states, where some people already pay over 40% in income taxes, might raise taxes further to cover budget shortfalls. New Jersey Gov. Philip Murphy reached a deal this month with legislative leaders to increase taxes on incomes over $1 million. Opponents of that “millionaires tax” have said it would trigger an exodus of wealthy people from the state.
“As awful as the [pandemic] is, it breathes new life into the Puerto Rican economy,” said Rodrick Miller, chief executive of Invest Puerto Rico, a not-for-profit organization trying to attract business investment.