Resident investor decree: 4% and six years away from 2027

The Resident Investor Individual decree is the tax benefit people still call “Act 22”, today housed in Sections 2022.01 and 2022.02 of the Incentives Code. Act 38-2026 did not eliminate it: it extended it through 2055, changed the rate for anyone applying from 2027, and added a six-year prior-residency requirement.

An individual eligible for the benefits of Sections 2022.01 and 2022.02 who is a Resident Individual of Puerto Rico, who was not a Puerto Rico resident between 17 January 2006 and 17 January 2012, and who becomes a Resident Individual no later than the taxable year ending 31 December 2055. For applications submitted after 31 December 2026, they must also show they were not a resident of Puerto Rico for a minimum of six (6) years prior to the date of moving. The law expressly excludes students studying outside Puerto Rico who lived here before leaving, personnel temporarily working outside Puerto Rico for the Government of Puerto Rico, its agencies and instrumentalities, and people in similar situations, because their domicile remains Puerto Rico.

• Not having been a Resident Individual of Puerto Rico between 17 January 2006 and 17 January 2012, and becoming a Resident Individual no later than the taxable year ending 31 December 2055.Verified against the official source
• For applications submitted after 31 December 2026: showing you were not a resident of Puerto Rico for a minimum of six (6) years prior to the date of moving to Puerto Rico.Verified against the official source
• Acquiring by purchase, as sole owner or jointly with your spouse, within two (2) years after obtaining the decree, title to real property in Puerto Rico, buying it from an owner — person or company — entirely unrelated to you, to constitute your principal residence.Verified against the official source
• Certifying in the annual report that you keep exclusive and complete ownership of that real property as your principal residence, alone or jointly with your spouse, throughout the decree’s term.Verified against the official source
• For anyone filing from 1 January 2027 onward: that this evidence show the fee simple title is recorded, or pending recording, in the Puerto Rico Property Registry in your name, jointly with your spouse, or in the name of a trust described in Section 2022.07.Verified against the official source

• The law publishes no document list or form to apply for the decree: the application lives in Section 2021.01 of the Incentives Code, which we did not read. What this Act does name as evidence is that of Section 6020.10(c): the evidence of the principal residence purchase and, from 2027, its recording or pending recording in the Property Registry.

1. 1

   Step 1: Everything depends on one date: 31 December 2026

   Before reading any number, place your application on one side of that line, because the law wrote two parallel regimes. Subsection (a) of Sections 2022.01 and 2022.02 applies exclusively to anyone who filed on or before 31 December 2026; subsections (b), (c) and (d) apply exclusively to anyone who filed on or after 1 January 2027. In both cases, provided the decree has not been revoked under Section 6020.09(a).

2. 2

   Step 2: Interest and dividends: from full exemption to 4%

   If you applied on or before 31 December 2026: income from all sources you earn after becoming a resident but before 1 January 2036, consisting of interest and dividends, shall be totally exempt from Puerto Rico income tax, including the alternate basic tax. If you applied from 1 January 2027 onward: that same income, earned before 1 January 2056, shall be subject to a preferential fixed rate of four per cent (4%) instead of any other higher income tax, including the alternate basic tax. The law adds a valve: if that income is subject to a more favourable rate under the Incentives Code itself, the Internal Revenue Code or any other law, it is taxed under the more favourable treatment.

3. 3

   Step 3: Capital gain: the appreciation before and after

   The law separates two appreciations and treats them differently. The appreciation your securities or other assets had before you became a resident, recognized after ten (10) years of residency, pays five per cent (5%) under both regimes; the only change is the recognition cut-off — before 1 January 2036 under the previous regime, before 1 January 2056 under the new one. The appreciation after residency does change: under the previous regime it is totally exempt if recognized before 1 January 2036; under the new one it is subject to the four per cent (4%) preferential fixed rate if recognized before 1 January 2056, with the same more-favourable-treatment valve. If appreciation is recognized outside those windows, the ordinary Internal Revenue Code treatment applies.

4. 4

   Step 4: The new requirement: six years of non-residency

   Section 1020.02(a)(4) keeps the old bar — not having been a Resident Individual of Puerto Rico between 17 January 2006 and 17 January 2012 — and adds a new one for applications submitted after 31 December 2026: the individual must show they were not a resident of Puerto Rico for a minimum of six (6) years prior to the date of moving to Puerto Rico.

5. 5

   Step 5: Who is excluded by definition

   That same section expressly excludes, and it is worth reading because it dispels a common belief: students studying outside Puerto Rico who lived in Puerto Rico before leaving to study, personnel temporarily working outside Puerto Rico for the Government of Puerto Rico, its agencies and instrumentalities, and people in similar situations, shall not qualify as Resident Investor Individuals, since their domicile in these cases remains Puerto Rico for the period they reside outside the jurisdiction.

6. 6

   Step 6: The principal residence, and what changed at the Registry

   Section 6020.10(c) requires submitting evidence of having acquired by purchase, as sole owner or jointly with your spouse, within two (2) years after obtaining the decree, title to real property in Puerto Rico, bought from an owner entirely unrelated to you, to constitute your principal residence; and certifying in the annual report that you keep exclusive and complete ownership throughout the decree’s term. What Act 38-2026 added applies to anyone filing from 1 January 2027 onward: that evidence must show the fee simple title is recorded, or pending recording, in the Puerto Rico Property Registry in your name, jointly with your spouse, or in a trust described in Section 2022.07.

7. 7

   Step 7: If you already hold a decree: nothing is taken, but you may move

   Two provisions say so. Article 6 establishes that all rights and obligations acquired through a decree conferred before this Act took effect under Act 22-2012 or Act 60-2019 shall continue to be honoured by the Government of Puerto Rico, its agencies and municipalities, and that this Act’s approval shall not affect acts performed or rights previously acquired, nor civil proceedings or suits already begun. And Section 6020.03(d) opens a door the other way: applications filed on or before 31 December 2026 that have not been granted may be processed, at the applicant’s election, under the new provisions; and every Resident Investor Individual holding a decree under Act 22-2012, or under Section 2021.01 applied for on or before 31 December 2026, may request a modification of their decree to reflect the new terms and conditions.

Decrees under the Incentives Code are applied for through the Business Incentives Office of Puerto Rico, attached to the Department of Economic Development and Commerce. Act 38-2026 creates no new counter and describes no procedure: the application lives in Section 2021.01 of the Code, which we did not read. The law publishes no address, phone or portal.

• Quoting the total exemption without saying whom it applies to: it belongs to the regime of anyone who applied on or before 31 December 2026, not the new one.
• Believing the 4% rate also covers pre-residency appreciation: that pays five per cent (5%) and only if recognized after ten (10) years of residency.
• Forgetting the new requirement of six (6) years of non-residency in Puerto Rico before moving, for applications after 31 December 2026.
• Thinking a Puerto Rican who studied or worked abroad qualifies: the law expressly excludes the student who lived here before leaving and personnel who temporarily worked abroad for the Government of Puerto Rico.
• Buying the principal residence from a relative or a related company: the law requires acquiring it from an owner entirely unrelated to you.
• Letting the two (2) years from the decree lapse without acquiring the principal residence, or failing to certify ownership in the annual report.
• Supposing the law voided existing decrees: Article 6 provides that previously acquired rights shall continue to be honoured.

These are the government pages this guide is based on.

• Departamento de Desarrollo Económico y Comercio (DDEC)

  DDEC

  bvirtualogp.pr.gov