Property tax rates are much lower than the US since values are based on the appraised value, which has not been updated since 1954. The effective property tax value is often 10% of current FMV. Additionally, there is a $15,000 tax exemption for primary residences and this does not factor in other potential savings from tax incentives such as Act 20 or Act 22.
FAQ
Frequently Asked Questions
During the early days of Act 22, this was a requirement. Since this 2016 amendment, you are now simply required to have a home available to you at all times. It is important to keep in mind that if you have a home in the US, you must have a comparable residence in PR to satisfy “Closer Connection” requirements. Our recommendation is to come visit, explore the island and see everything it has to offer. During this scouting trip, you will find something just right.
While the general real estate market has been in decline since 2008 due to the financial crisis, luxury real estate has held, if not increased, in value. With the influx of Act 20/22’s, Condado, Dorado, and Guaynabo have seen rising demand since 2012. Due to the success of the Act’s, we expect property values to rise significantly over the next 10 years.
Additionally, the island has many opportunities for investment – ranging from low-income housing to large commercial parcels.
Yes, much safer than most newcomers expect. The majority of crime is petty theft and drug-related. Using common sense and staying away from dangerous areas are the best ways to avoid trouble – just as it is anywhere else. Each neighborhood in PR is unique and all upscale areas are gated with 24/7 security. Feel confident that your team at EDR will guide you to a beautiful, safe place.
Very similar to the mainland. Commissions can vary depending on the deal and the broker but each sale is generally 6%. For rentals, commissions are typically equal to one month’s rent. In co-broke situations, where the buyer’s and the seller’s agents agree to split commission, everything would depend on the amount that the seller’s agent agrees to with the owner.
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As with any market, short-term leases come at a premium and are more difficult to find – many landlords are looking for a one-year commitment or more. Condado is the hottest market for rentals and is priced accordingly.
From an Act 20/22 perspective, clients typically look to rent for a year, get a feel for different areas and then purchase a permanent residence. The island has a wide variety of properties for any budget and we will help you find exactly what you’re looking for.
All island banks are subject to FDIC requirements, giving uniformity to many aspects of the process but some unique local laws apply. Before closing on a property, the bank will request an apprasial, which will be the basis of financing terms. This fees related to this requirement are typically incurred by the buyer and are non-refundable.
Mortgage rates range between 5-7% depending on credit scores, down payment and other criteria. If you are considering purchasing a property, let your EDR team know as some showings require buyers to be pre-qualified.
This decision is up to you and we have experience with both processes. PR has many of the same stores as the mainland and many of them ship to the island. Also, many companies in PR have created a niche market for luxury furniture. In the case of clothing and furniture, the best malls are Plaza Las Americas and The Mall of San Juan. When in doubt, head to Costco, which has multiple locations on the island.
Local notaries hold much more responsibility than those on the mainland. In order to become a notary, one must be a licensed Puerto Rican attorney. All real estate transactions require notary work (except leases under six years) and are to be recorded in the property registry, which is an additional cost. Lawyers who are contracted as a notary are to be impartial to the transaction and are financially and criminally liable for the transaction. The notary’s main service is to ensure that both parties of a transaction are in compliance with Puerto Rican law.
A typical notary fee is .5-1% of the transaction. Per Puerto Rican civil code, the cost is the responsibility of the seller and the buyer is responsible for a certified copy of the registry recording. In some cases, these fees can be split between the parties.