Watch Cherif’s presentation about Puerto Rico tax structure:
A Great Video Explaining the PR Tax Planning
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How to avoid and/or minimize taxes legally using the US Congress Tax Incentive Laws within the US Territory of Puerto Rico:
(No offshore set ups and no anonymity needed)
a) If you have a successful US Company with high yearly net income ($100K to $500K net per year).
b) Get Two Corporations set up in Puerto Rico: –One Business Corporation to receive management and marketing fees from the US Company –One Real Estate Corporation that will invest in an office share condo space ($145K) in a specially designated property* to receive rental income from the PR business corporation. Such RE Corporation can net $150K in tax-exempt rental per year. (Special tax exemption law since 1955 extended for some specially designated properties)
c) Purchase the fractional share of office space, in cash ($145K) or use portion of the tax savings to finance the acquisition over 10 years ($10K down payment and $135K financed) –We offer non-recourse financing up to 10-year loans. You would buy through your PR RE Corp. only the fraction office space you need based on your income from the US.
Cost of set up: (If paid in cash) a) One time set up fee for 2 PR C Corp total $3K b) One time investment purchase of office share $145K c) On-going fee of $12K/yr for HOA d) On-going fee of $3K/yr to file Taxes and maintain both corporations in good standing –Total upfront $148K and total on-going expenses are $15K/yr – You net $147K ($47K more than US)
Benefits: (If paid in cash)
a) $162K expensed from US to PR through this legal structure, will give you a net after all yearly on-going expenses of approximately $147K b) This is $47K more than in California and a return of over 33% cash on cash on your total investment and expenses c) The investment includes your ownership in the real estate condo share through your PR real estate corporation in perpetuity d) If you invest the net difference you would compound the returns in the millions over the years tax-free
a) Your US Co. will expense management and marketing fees to PR Bus. Co. ($162K) b) The PR Bus. Co. will be the management headquarters for your US business. It will lease office space from your PR RE Co. ($162K) c) The PR RE Co. will net $150K tax exempt due to special Tax incentive law instead of approximately $100K net in the US.
Cost of set up: (If financed over 10 years) a) One time set up fee for 2 PR C Corp total $3K b) One time investment of $10K down payment c) On-going payment for 10 years on $135K balance $1,500/mo ($18K/yr) for non-recourse financing d) On-going fee of $12K/yr for HOA e) On-going fee of $3K/yr to file Taxes and maintain both corporations in good standing –Total upfront $13K and total on-going expenses are $33K/yr for 10 yrs till office share condo is paid off – You net $129K ($29K/yr more than US) till pay off then $47K/yr in perpetuity
Benefits: (If financed over 10 years)
a) $162K expensed from US to PR through this legal structure, will give you a yearly net after investment payments and all expenses of: $129K b) This is $29K more than in California and a return of over 93% cash on cash using money from your tax savings c) The investment includes your ownership in the real estate condo share through your PR real estate corporation in perpetuity. Since you have financed it over 10 years at $18K/yr payments plus the $12K/yr for HOA and $3K/yr for tax and maintaining Corporations, your total expenses would be $33K/yr. (Till condo is paid off expenses thereafter drop to $15K/yr) d) Net once Condo share is paid off shall be $47K/yr., which is an infinite of return since it has all been paid with tax savings money. e) If you invest the net difference you would compound the returns in the millions over the years tax-free
Please Note: This structure is completely turn key and handled by our local team of professionals from real estate historic restoration experts, to a CPA firm with over 30 years of international tax law experience and attorneys specializing in mortgage financing for fractional ownership of these specially designated properties.
*Specially designated property: There are only a few properties that have received the Washington DC preservation department special approval for tax exempt income based on certain terms and conditions including the full rehab and restoration of the select properties to bring them back to their historic integrity. The work must be based on original design and construction. This program is offered in specific areas and for a few designated properties only. Specific requirements regarding on-going maintenance and reviews by local government organizations are necessary for continued approvals and compliance with the incentive tax exemption laws.