The IRS recently announced some changes to the Opportunity Zone regulations. As a result, almost the entire territory of Puerto Rico is now designated as an Opportunity Zone.
As such, investing into qualified projects in Puerto Rico, which is part of the U.S. and is therefore protected by the same property rights and other legal regulations as are applicable in the mainland, is now a highly strategic investment for minimizing capital gains tax for investors who plan to keep their reinvested capital within the territory.
As a U.S. territory, Puerto Rico enjoys legal and economic benefits that are not available to the neighboring Caribbean islands.
Unlike other Opportunity Zones in the continental U.S., Puerto Rico offers unique opportunities for investors.
A history of debt crises and fiscal mismanagement, coupled with recent natural disasters, has resulted in market conditions in which investors can acquire prime real estate in Puerto Rico at a bargain price.
Also, since it’s easier for U.S. citizens to travel there, it has an increasingly robust tourist industry. Meanwhile, the use of US. dollars minimizes the currency risks.In addition, the real estate prices in Puerto Rico are substantially lower than properties with the equivalent characteristics.
With a low acquisition cost and a sound vacation rental market, total returns for real estate investment in Puerto Rico can be as high as 15% to 20% prior to taking into account the benefits available under the Opportunity Zone legislation.