P.R. Laws tit. 13, § 10732
(a) Granting of tax exemption.— The income earned by any eligible lessor from the long- or short-term leasing of a residential property acquired pursuant to this chapter shall be fully exempt from Puerto Rico income taxes, including the alternate basic tax and the alternative minimum tax provided in the Code. The tax exemption herein provided shall apply to income earned with respect to leasing contracts entered into after the effective date of this act, including those entered into after December 31st, 2012.
(b) Term of the exemption.— The tax exemption herein provided shall only apply for a maximum term of ten (10) taxable years, beginning on the date of acquisition and ending not later than December 31st, 2021.
(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 eligible taxpayers, regardless of whether they are residents or non-residents of Puerto Rico.
(d) In order to be entitled to claim the tax exemption provided herein, the eligible lessor shall report the rent earned in his/her Puerto Rico income tax return, as well as the physical location of the real property, and shall report the rent as exempt income. Otherwise, the net rent shall be taxed in accordance with the applicable provisions of the Code.
History —Nov. 21, 2011, No. 226, § 3, retroactive to Nov. 1, 2011.