P.R. Laws tit. 13, § 10692
(a) Granting of tax exemption.— The income earned by any eligible lessor from the leasing of a residential property shall be fully exempt from Puerto Rico’s income taxes, including the alternate basic tax and the minimum alternative tax provided in the Code. The tax exemption herein provided shall apply to the income earned with respect to leasing contracts entered into after the effective date of this act, including those entered into after June 30th, 2012, as well as those entered into at the time of the approval of this act.
(b) Term of the exemption. — The exemption herein provided shall only apply for a term of up to ten (10) taxable years, commencing on January 1, 2011, and ending on December 31, 2020.
(c) The rent earned by any eligible lessor subject to the tax exemption provided herein shall not be subject to the withholding of income taxes at source. The benefits of this section shall apply to those eligible taxpayers, regardless of whether they are residents or non-residents of Puerto Rico.
(d) In order to avail him/herself of the benefits of the tax exemption provided herein, the eligible lessor shall include the rent earned in his/her Puerto Rico income tax return and the physical location of the real property and shall declare the rent as exempt income. Otherwise, the net rent shall be taxed in accordance with the applicable provisions of the Code.
(e) This tax exemption from the income earned by any eligible lessor from the leasing of residential property shall also apply to purchasers of residential properties under §§ 10721 et seq. of this title, known as the “Housing Market Boost Program’s Transition Act”.
History —Sept. 2, 2010, No. 132, § 1.2; July 5, 2011, No. 115, § 2; Dec. 30, 2011, No. 288, § 2.