Hi! John Lee Dumas here, founder and host of Entrepreneurs on Fire, a top-ranked business podcast where I interview the worlds most successful entrepreneurs. This post is coming at you from the beautiful island of Puerto Rico, and throughout I’ll be sharing why we chose to move here in 2016.
Interested in learning more about Entrepreneurs On Fire?
On to Puerto Rico!
Since the age of 18, I’ve never lived in the same place for more than 2 years. From Providence College, to the Army, to Boston – New York – San Diego – and Maine, I seem to get that itch every couple years to ‘relocate’.
In 2016, Kate and I had been in San Diego for a few years, and that itch had me looking for options (not to mention the BRUTAL Cali taxes).
I found out about the AMAZING Act 20/22 tax benefits offered by Puerto Rico (more on this below) and immediately knew I was Caribbean-bound. I just had to convince my born-and-bred-Pacific-Beach-native girlfriend (Kate) to move with me.
After promising a quick return to SD if PR turned out to be a bust, Kate and I moved our business and life from sunny San Diego to sunnier (and rainier) Puerto Rico on May 1st, 2016.
Puerto Rico is a US territory, so it was an easy move as you don’t even need a passport to visit if you’re a US citizen.
Act 20 and Act 22
The main reason we chose Puerto Rico was because of Act 20 and Act 22 and the tax benefits they offer.
Act 20 and Act 22 are the BEST tax saving opportunities for entrepreneurs that I believe will be available in our lifetime, and as I update this post, Kate and I have been enjoying the benefits of both Act 20 and Act 22 for four years!
Before I go any further, just a note that I’m not a lawyer, so nothing here is legal advice. I’m not a professional when it comes to advising businesses or individuals on Act 20 or Act 22; I’m simply sharing my personal experience as it relates to both. So you should talk to an actual legal professional if you’re considering Act 20 or Act 22 (recommendation below).
What is Act 20 in a nutshell?
If you move your business and yourself to Puerto Rico and spend more than half the year here, your business pays a flat 4% corporate tax rate, total.
No state tax, no federal tax.
For those interested in learning more, Google ‘Act 20 Puerto Rico’ for the latest and greatest. This is also a great video to watch on the topic.
It took us 18 months from the date of our application to receive the Act 20 Decree back in 2016, and Act 22 took about 10 months.
It is real, but it is also a process.
We have friends who moved here recently and are benefitting from a much smoother and faster process; some have received their Act 20 in as little as four months.
The good news is, if submitted correctly, it can be retroactive to the date you move to Puerto Rico. Therefore, even though we didn’t receive our actual decree until 2017, we have been paying 4% taxes since May 1st, 2016.
You do have to pay yourself a ‘reasonable’ salary as well, which will be taxed at 33%, but the rest of your income will be taxed at 4%.
What is Act 22 in a nutshell?
If you move your business and yourself to Puerto Rico and spend more than half the year here, you will pay 0% capital gains on EVERYTHING.
For those interested in learning more, Google ‘Act 22 Puerto Rico’. There are plenty of up-to-date articles about the Act and how it works.
And if you’re interested in learning more from an actual Puerto Rican attorney who specializes in Act 20 and Act 22, you can email our attorney, Alexis.
What’s it like to move to Puerto Rico?
Our first two months on the island were spent on the West side in a town called Quebradillas.
It was an enjoyable two months and allowed us to explore the West side of Puerto Rico (absolutely gorgeous!)
But when it came to finding a place to settle down, we were looking for more of a community-vibe, and after a lot of searching, we didn’t find what we were looking for on the West side.
So we headed East to check out Old San Juan, which is also gorgeous!
The conveniences in the San Juan area are great, but city living wasn’t what we were looking for, either.
So we headed South down the East coast, and that when we found ‘Palmas Del Mar’, a gated community in the town of Humacao.
Instantly, we knew we had found home.
After a day exploring Palmas, we found our dream home (‘crib tour’ below!)
In Palmas Del Mar we found the community we were looking for.
It’s not only full of successful and adventurous entrepreneurs who have become some of our closest friends, it also has several great amenities that I’ll get into a bit later.
If I could go back in time knowing what I know now, I would move to Puerto Rico in a HEARTBEAT.
Palmas Del Mar has truly become home, and I can’t picture myself living anywhere else in the foreseeable future.
Is Palmas Del Mar a great place to raise a family?
Kate and I don’t have kids, but more than half of our friends here in the community do. If you were to ask any one of them, in one word, they’d say YES.
Just watch the Palmas Del Mar Commercial below and you’ll hear from actual families who have made their home here.
Pros and Cons of living in Puerto Rico
Like anywhere, it’s not all sunshine and rainbows, and there are some cons that anyone moving to Puerto Rico should be aware of.
Again, I’m simply sharing my personal experience here.
Cons of living in Puerto Rico
- The roads are in rough shape in many places around the island. Potholes are common & driving is poor. This does seem to be improving, as 2020 has seen a lot of positive roadwork.
- Power outages happen a few times a month, sometimes more often. We have a whole house generator, so there is very little disruption in our lives, but it can still be frustrating.
- English is a distant second language. Even though Puerto Ricans begin learning English in Kindergarten and continue through 12th grade, few retain the language. It’s one of the main reasons we moved to Palmas Del Mar, where English is the language of choice.
- Hurricanes are always a possibility, and we learned first-hand what that’s like in 2017. Hurricane Maria devastated the island that year. At the time you are reading this Palmas Del Mar is 100% back to pre-hurricane status, but some parts of the island (especially inland) have years of struggle ahead.
- Health Care is ‘to be desired’. There are rumors of a ‘state of the art’ hospital being built right outside of Palmas in 2021 – 2022, but time will tell…
Of course, there are also many pros to living in Puerto Rico!
Pros to living in Puerto Rico
- It’s an adventure to live on a tropical island, and it’s truly beautiful here! There is so much to explore.
- The tax benefits under Act 20 and 22 are amazing.
- The people who make the move to Puerto Rico are incredible. Adventurous, successful, and fun are just a few of the adjectives that come to mind.
- The feeling of community in Palmas Del Mar is strong. We are on the dark side of the moon in some ways, and that gives residents the sense of a tribal family. The support is incredible.
- We are 45 minutes southeast of San Juan, so we are close enough to a major city and airport, but at the same time far enough away.
- Because PR is a US territory, you don’t need a passport to get here, and we have the major stores we have come to know and love in the States like Costco, Home Depot, Marshalls, etc.
- Palmas Del Mar is very kid friendly, with a K – 12 academy right in the community.
- Palmas Del Mar also boasts a golf club with 2 great golf courses (designed by Chi Chi Rodriguez), a tennis club with 20 tennis courses, a beach club, 17 restaurants, and a Plaza with a bank, barber, mail facility, market, and other nice to haves.
If you are interested in checking out real estate in Palmas Del Mar, you can’t beat Ricky and Liz, an amazing husband and wife real estate team.
Tell them JLD sent you and they’ll be extra nice ;-).
Overall, if you are adventurous, willing to put up with a few ‘3rd world frustrations’, and are in a situation where Act 20 or Act 22 would be financially game-changing for you (as it is for us), then it’s time to call Puerto Rico home sweet home!
Also, this PDF Resource Guide created by one of our great friends, Heidi DeCoux, who is a Palmas Del Mar resident, will be incredible helpful if you’re considering the move.
Places to visit in Puerto Rico
Here are just a few of the places around Puerto Rico we’ve had the opportunity to visit…
Flamenco Beach, Culebra
El Morrow Fort, Old San Juan
El Yunque Rain Forest
Beaches at Rio Mar