Move to Puerto Rico to Axe Taxes w/ Rachel Farris #1028

Summary

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How to Money – Move to Puerto Rico to Axe Taxes w/ Rachel Ferris #1028

Date: August 27, 2025
Host: Joel (and Matt)
Guest: Rachel Ferris (CPA, Puerto Rico tax strategist)

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Episode Overview

In this episode, Joel dives deep into a fascinating, increasingly buzzworthy financial strategy: relocating to Puerto Rico for potentially massive tax breaks. Joined by CPA and tax strategist Rachel Ferris, the discussion deconstructs why more Americans, from crypto investors to entrepreneurs, are considering a move to Puerto Rico under Act 60. They detail the tax incentives, practical drawbacks, requirements for compliance, and what lifestyle trade-offs and community dynamics await newcomers. If you’ve wondered about “tax haven” headlines or what it practically takes to pull off this move, this is a comprehensive guide.

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Key Discussion Points and Insights

1. Why Puerto Rico? – The Appeal of Tax Incentives

Timestamps: 05:26–13:34

• Market and Political Volatility: Rising tax anxiety and uncertainty, especially in high-tax states (California, New York), are driving people to seek secure, predictable tax environments.
• Background: The roots of the program trace to 2012’s Act 20 and Act 22; revamped into Act 60 in 2019.
• Act 60 Benefits:
  • 0% tax on Puerto Rico-sourced capital gains, interest, and dividends
  • 4% corporate income tax for qualifying businesses
  • Additional incentives for investing locally and real estate purchase mandates
• Economic Development: Increased entrepreneurship, job creation, and local investment—it's not just “tax dodging,” but designed to stimulate the island’s economy.

Quote:

“They like signing a contract with the government and being able to be like, hey, that’s what it’s going to be for the next 10 years.”
— Rachel Ferris (06:18)

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2. How Puerto Rico Differs from Other “Tax Havens”

Timestamps: 13:52–15:45

• Puerto Rico uniquely lets U.S. citizens retain their citizenship and operate fully within the law—there’s no need to create shell companies or renounce citizenship as with typical offshore havens.
• Other U.S. territories (USVI, Guam) lack comparable infrastructure or incentive programs.

Quote:

“You are doing things the utmost legally that you possibly can. ... Everything is as transparent as possible.”
— Rachel Ferris (13:52)

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3. Eligibility and Compliance: How Do the Rules Work?

Timestamps: 19:19–22:05

• Three main residency tests:
  1. Presence Test: 183 days/year in PR
  2. Tax Home Test: Principal business operations must be in PR
  3. Closer Connection Test: Must clearly sever ties with prior state (“the heart test”)
• Real steps include relocating family, changing social/religious ties, and giving up primary homes in your old state.

Quote:

“You need to make it look like you’ve moved, especially in high-tax states where they really want to come after you.”
— Rachel Ferris (22:14)

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4. Who Does This Make Sense For?

Timestamps: 25:12–25:51; 40:51–42:01

• Great fit for:
  • Investors, entrepreneurs, remote or contract workers with flexible employers, the FIRE crowd
• Not a good fit for anyone unwilling to truly relocate for 3+ years.
• No fixed income threshold—worth is subjective to individual situations.

Quote:

“I don’t love to give a dollar amount for people because $10,000 means something different to me than it might mean to you.”
— Rachel Ferris (40:51)

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5. Deep Dive: How the Tax Benefits Work

Timestamps: 29:39–31:36

• Capital Gains: Only gains accrued after becoming a bona fide resident are eligible for 0% tax; pre-arrival gains are taxed in the U.S.
• Trades: Must be executed while physically in Puerto Rico to qualify.
• W2 Employees: Need employer cooperation or must shift to contractor status for full benefits.
• Special Decrees: Contractors, highly skilled professionals, and business owners can unlock enormous savings. The “difficult recruit” clause lets companies fill hard-to-fill PR positions with U.S. hires on special terms.

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6. The Durability of the Law (And Risks)

Timestamps: 34:05–36:22

• Residents sign a 10–15 year contract with the PR government: benefits can’t be clawed back, only improved.
• Currently extended to 2055; risk of sunset now considered minimal.

Quote:

“Here you have a guaranteed contract with the government... It is set in stone.”
— Rachel Ferris (34:39)

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7. Lifestyle Factors and Community Integration

Timestamps: 45:04–49:25

• Expat Communities: Established enclaves can feel very U.S.-like; outside of these, expect a Spanish-speaking environment.
• Food, utilities, and healthcare largely feel familiar, though “quality of service” sometimes differs (e.g., hair salons, some healthcare).
• Common Concerns:
  • Power outages: mitigated by generators in higher-end residences.
  • Hurricanes: savvy residents book refundable escape flights in advance.
  • Schooling: most expats opt for private or homeschooling; options have continuity with mainland U.S.

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8. Community Impact and Local Attitudes

Timestamps: 50:05–52:13

• Some locals express frustration with rising housing prices and “gentrification,” especially in popular expat areas.
• The government now mandates annual charitable donations from Act 60 decree holders ($10k/year, $5k to child poverty reduction).
• PR has opened some tax incentives to locals to level the playing field.

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9. Not Just “For the Rich”

Timestamps: 52:50–54:36

• Broader eligibility than commonly perceived; suitable for a spectrum of incomes.
• The real prerequisite: willingness to truly relocate life for several years, not just travel back-and-forth.

Quote:

“If you are just, you know, Joe Schmo out of Ohio and you want to move down and you just have a lot of investments and you want to check it out, it’s going to be a pretty easy process for you.”
— Rachel Ferris (53:54)

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Notable Quotes & Memorable Moments

• On compliance:
  “You do need to move for three years of your life and if that is not something you’d even be willing to consider, then I don’t think this is the program for you.”
  — Rachel Ferris (41:14)

• Describing the expat lifestyle:
  “Besides the nice beaches and the warm weather, I find that most people I’m interacting with are very similar to the people I’d be interacting with back in California.”
  — Rachel Ferris (45:39)

• On lifestyle vs. sacrifice:
  “The quality of life in Puerto Rico is great. You are probably going to live a higher quality of life than you did in the US...I don't think it's as much of a sacrifice as fire is.”
  — Rachel Ferris (37:35)

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Important Segment Timestamps

| Segment | Timestamp Start | |----------------------------------------|----------------| | Main interview intro and PR overview | 01:47 | | Why Puerto Rico is a tax haven | 05:26 | | Eligibility, compliance, requirements | 19:19 | | Tax benefits for investors/businesses | 29:39 | | W2 Employee scenarios | 31:36 | | Durability of benefit laws | 34:05 | | Lifestyle and moving trade-offs | 45:04 | | Community attitudes, local impact | 50:05 | | Who is this really for? | 52:50 | | Rachel’s contact info | 54:44 |

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Where to Learn More

• Rachel offers a course at maximizewealth.com and free consultations at rachelfariscpa.com.

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Tone & Takeaways

Rachel demystifies both the significant financial opportunity and the very real requirements/cultural adjustments necessitated by a move to Puerto Rico. Joel keeps things grounded, reinforcing that this isn’t an “everyday personal finance tip,” but a major life strategy that can (and should) be explored by those seeking aggressive tax optimization—especially if they’re flexible, entrepreneurial, and truly ready for a multi-year lifestyle shift. While not for everyone, the discussion reveals it’s wider-reaching and more accessible than many would assume; and at minimum, it encourages listeners to always “know the rules of the financial game.”

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Transcript

[Rachel Ferris]

This is an iHeart podcast.

[Joel]

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[Matt]

Visit navyfederal.org truecar to learn more. Navy Federal is insured by NCUA Credit and Collateral subject to approval. Hey, it's Matt and Joel from How To Money. Joel, I feel like you've always got a cool trip in the works. What's next on your travel radar?

[Joel]

All right, well, my dad and I were planning, hoping to hike the Camino de Santiago in Spain next year. I mean, not the full thing. Cause that would be insane. That'd be really long. But at least a portion of it. It's been on our bucket list for a while and I think we're finally gonna make it happen.

[Matt]

I love it, man. Yeah, it's gonna be such a great memory. It's also a really long hike, so I hope you are building up to it. You getting the miles in good?

[Joel]

I've already started getting my body ready. And if you're planning a big trip, too, it might be the perfect time to let your home work for you.

[Matt]

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[Joel]

Welcome to how to Money. I'm Joel, and today we're talking moving to Puerto Rico to axe taxes with Rachel Ferris. Yeah, that's right. Some families have lived on the same plot of land for generations. There's something intriguing about that to me. But the United States also has a history of moving towards opportunity. The settling of the west, the gold rush in California, returning veterans moving at higher rates in the aftermath of World War II. And recently, just Covid, we saw an uptick in people reconsidering their living situation. Hey, do I like kind of where I'm living and the accommodations that I'm in. Do I want to be in the middle of a big city? But what if the next great place to move to is an island in the Caribbean Sea? Not just because it's beautiful, but because it often offers certain tax perks that are unavailable anywhere else. It's not for everyone, but I'm also kind of fascinated by the prospects. So I've invited Rachel Ferris on the show. She's a cpa. She's a tax strategist who helps individuals and business owners think through the details of uprooting from the mainland to settle in Puerto Rico, largely because of the massive tax savings that can be had. So, Rachel, I'm excited to discuss this with you today. Thank you for joining me.

[Rachel Ferris]

Awesome. Thank you for having me. I'm super excited.

[Joel]

So, first question I ask everybody who comes on the show is, what do you like to splurge on? What's your craft beer equivalent? Matt and I will buy expensive beers, and some people think it's ridiculous to spend 25 bucks on like a bottle of beer. But I'm like, no, it's. It's worth it. What's that for you?

[Rachel Ferris]

I'm going to hop on the alcohol train here and I'm going to say nice cocktails. I love going to a fancy bar in a new city and trying four to five cocktails on that list and sharing it with whoever I'm with that night. It might be ridiculous to spend 20 to 30, $30 on a cocktail, but for something, for me, I think it's worth it.

[Joel]

Okay, 30 bucks on one cocktail.

[Rachel Ferris]

It gets expensive.

[Joel]

Tell me, what are the, what are these bars where they get that expensive? Because I know they've gone up in price. It used to be like 10 or 12 bucks was reasonable. And now I swear at a good cocktail bar, you're dropping 15 to 20 on a great one.

[Rachel Ferris]

Yeah, well, I mean, I know it gets expensive. I was just in New York the other weekend and I went out to this bar called Double Chicken Please. And I think most of the cocktails were at least in the mid 20s. And after tip, you're spending upwards of $30 on every single drink. So it was expensive but delicious. They Key lime pie cocktail that tasted exactly like a key lime pie. They had a Japanese cold soba noodle one that tasted exactly like the Japanese cold soba noodles. It was a very interesting take and I was. It was worth it for me in every aspect of it.

[Joel]

That sounds, I mean, similar to kind of what's happened in the craft beer scene where you've got like all these really interesting takes on beer where they're not even trying to taste like beer anymore. Right. Pickle flavored beers and stuff like that. I guess cocktails are going in that same direction, which is fascinating. Let's talk about Puerto Rico. I want to start out at the outset to say that this piqued my curiosity, even though I don't think I'm planning on moving to Puerto Rico anytime soon. I think there's probably a large chunk of listeners who it doesn't make sense for. But still, I think it's just fascinating discussion and worth covering. I've been hearing more buzz about Puerto Rico as a tax haven. What is with the growing, the burgeoning interest in Puerto Rico as a place to live and as a place to potentially avoid taxes that people might otherwise pay?

[Rachel Ferris]

Yeah, 100%. Well, I think the growing recent interest recently has really been surrounded by the fact that there's a lot of market volatility and there's a lot of political instability. And so when you have things in government happening like these tariffs or you're not sure what your profile is actually going to look like a couple months down the road, A lot of people are now considering tax planning as an aspect of financial planning. And so these benefits have been around since 2012 with the original Act 20 and Act 22. They really started again in around 2019 where they revamped that law and it created Act 60. And so Act 60 is what we currently have where we have a zero percent tax on capital gains, interest and dividends and then a 4% corporate income tax. There's a lot of other incentives that come along with it. But in the past few years we've been seeing more people getting upset with the rising tax rates and just discontent about living in the US and not knowing what things are going to look like for them a year from now. And so they like signing a contract with the government and being able to be like, hey, that's what it's going to be for the next 10 years.

[Joel]

You said rising tax rates, but interestingly enough, like tax cuts and job act and then the one big beautiful bill kind of cements lower tax rates for a decent chunk of people. So when you say rising tax rates, what are you referring to?

[Rachel Ferris]

Yeah, I'm referring to a lot of things with tariffs as well. A lot of people that do move down for the business side of things are manufacturers and they're worried about retaliation tariffs on the back end of things. A lot of people, especially in high tax state, it's like New York and California, it's not necessarily just federal. They're worried when they see the debts growing in their actual state. Right. So you're looking at California that essentially their only solution is to take out more money from the taxpayers hands to really be able to pay off that debt. They're looking at the future, not just right now, but 5, 10, 15 years from now. What is that going to look like and how can I basically secure my own kind of tax. Yes. Haven right now to make sure that we're doing things correctly in the long run.

[Joel]

And we're talking about those high tax states, we're talking about double digit state tax rates for the highest earners in some of those super high tax states. So in addition to potentially the, you know, owing at the highest end of the federal, you know, federal tax bracket, that could be a substantial tax bill that a lot of those people are looking to avoid.

[Rachel Ferris]

Yeah, 100%. I mean in California if you are in the highest tax rate, you're probably paying over 50% of your income every single year in taxes. And so when you can really talk about hey, I can cut that down to 4% across the board for my business, it's almost non negotiable for people that really want to get that competitive edge for a few years or just gain financial freedom by moving down for around three years, then moving back to the US after that. It's really a strategy that I'm seeing people take advantage of in the midterm. Not necessarily that they're planning to stay there for the rest of their lives, but they're using it for a few years.

[Joel]

I do want to talk about that in just a bit. I kind of the potentially part time nature of it. Oh, do it for a season and then maybe you could save on taxes, then you can get back to your normal life in the US I'm curious though too, like does that mean you're not really getting calls from people in states like Tennessee where there's not a state income tax? Or are there still folks in those lower tax states where it can make sense?

[Rachel Ferris]

Oh, there's still folks in those lower tax stakes where it makes sense. I mean, I think again it depends on the actual income range that you're actually in and what those savings actually matter to you, what you're trying to actually save for. Right. But I get most people from actually 0% tax states as well or really low income tax states. It's also a Benefit because you have the benefit of 0% tax on capital gains, interest, and dividends. So even if you don't run a business where you want to take advantage of that 4% corporate income tax rate, there are plenty of benefits that kind of trickle down to you. And again, if you're in a high tax bracket, you're still needing to pay federal taxes even if your state doesn't tax you. And so because of that, a lot of people see the benefit of moving.

[Joel]

Down because capital gains tax rates are favorable compared to many of the income tax brackets. But 15%, it's not as good as 0%. Right? So. So I get that, and I want to dive into some of those details in just a little bit, too. But I'm curious as well. Like, you worked for one of the big four accounting firms. What got you into this niche? Because it is, it's. It's very specific. Like, I'm going to help people move to Puerto Rico to save on taxes, not just, you know, help people with their tax returns or like, you know, what. What pushed you in this direction specifically?

[Rachel Ferris]

Yeah, I actually love getting this question. So I had a very close family friend that relocated down to Puerto Rico. They gave me a call a few, and we're like, hey, I've never heard of this. Is this legit? Have you ever heard of it? And it had never even crossed my mind before that there were these options out there. I was like, yeah, I can give it a crack. I'll kind of review some documents, see if this is legit, see how I'm able to help you out. Just do it pro bono.

[Joel]

And it sounds like tax evasion or it sounds like a scam on the surface, right? You're like, I'm going to move to Puerto Rico and never pay tax again.

[Rachel Ferris]

Oh, yeah. And I think that's a big misconception about it, is that people don't understand why it really is allowed. So I can kind of go into that right after this. But essentially they moved down and they were like, wow, you facilitated that process so cleanly for us. The stress of moving, because there was so little information out there, was really hard to get. And so they started referring me off to their friends, sort of word of mouth. I developed a lot of personal relationships with lawyers, CPAs, wealth managers on the island and also on the mainland US and my practice has kind of just grown from there. It was very happenstance.

[Joel]

So what makes Puerto Rico special then? Like, yeah, why is it kind of this exception to the rule that the tax man's going to get his cut. Why are there unique tax rules for Americans moving to Puerto Rico in the first place?

[Rachel Ferris]

Yeah, so if you've ever heard of the phrase no taxation without representation, this is a perfect example of that. Right. So Puerto Rico is a US Territory and so they are technically part of the US you can keep your US Citizenship and you have a US Passport still. The difference is that they don't have voting representation in Congress or Senate or anywhere in Washington, D.C. and so the U.S. federal government is not able to institute taxes on Puerto Rico as its own. So they're able to develop their own tax system. And so because of that, they don't have to comply with federal tax rules. And so they've developed this unique incentive code basically to incentivize people to move down to help promote the Puerto Rican economy and uplift it. As a lot of you probably know, there has been a lot of issues with, you know, economic development in Puerto Rico. You had Hurricane Maria hitting in 2012. You know, you have all these things that have happened that have really not allowed Puerto Rico to grow in that same area. And when they brought in these Acts 20 and 2022 in Acts 60, basically, it helped uplift everything. They brought more entrepreneurship, more capital to the island, brought more jobs to the island, and it's really helping them uplift it from the ground up. So it's been a huge transformation that the island has seen and a lot of people are very, very pro act 60 people coming down because of the fact that it's opened up so many new opportunities for people actually located on the island.

[Joel]

Because the people who are moving down have money and they are incentivized to invest in the island. So it's not just like, hey, let me pay no tax, but there's also this sort of thing that goes alongside of it to incentivize economic opportunity for the locals. Right.

[Rachel Ferris]

100%. I mean, you have to buy a property within your first two years of moving down. So that's helping with the real estate development. Right? It's helping with, you know, you got to get your hair cut, you have to go to the dentist, you have to do all these things that are helping build up that economy. If you are a business that makes over $3 million, you need to hire one Puerto Rican. And so it needs to be a skilled worker, not just someone that cleans your house. Right. It needs to be someone that is actively involved with day to day business operations. So you're really helping train people and give them skilled work. So if you do decide to leave the island after five years, you've actually really contributed and now they can start their own business maybe. Or now that they've brought in enough money from their dental practice, they can reach out, find new clients, do extra marketing. It's really been quite a flourishing thing. And they also have extra incentives if you invest in Puerto Rican businesses. So let's say you keep your normal investment profile that has, I don't know, Tesla, Coca Cola, whatever it might be. If you invest in Puerto Rican businesses and Puerto Rican local kind of companies or hedge funds or private equity funds, you actually get additional benefits. So it's encouraging you to invest in local things on the island as well.

[Joel]

Okay, what's the difference between Puerto Rico and other low cost or low tax destinations that other people might have heard of? Like there's the perpetual joke about the bank account in the Cayman Islands. Or you know, Singapore has been talked about as a tax haven for Americans. So like what? Yeah, what's the difference? What makes Puerto Rico superior?

[Rachel Ferris]

Yeah, so in most other places, United States citizens are actually taxed on their worldwide income. And so if you're going to the Cayman Islands, Singapore, Dubai, a lot of the big tax haven names that I kind of hear out there, you actually are supposed to be paying US Taxes on a good portion of that. And if you're circumventing it to pay as little as possible, there's a chance that you're not doing it fully legally or you have to renounce your citizenship in Puerto Rico. Since it's a US Territory, you can keep your US citizenship. So you are a US Citizen this entire time. You are doing things the utmost legally that you possibly can. You are not creating different holding companies and circumventing money here, here, here and here. Right. You are having a legitimate business that is registered with the government. Everything is as transparent as possible. There are audit financial statements. You need to file an annual report every single year. It is clear, transparent and legal. And you can keep your US Citizenship, which is the biggest appeal that I see for people. Now I hear a lot of talk about other U.S. territories. Really, they just don't have the same built out infrastructure that Puerto Rico does in terms of living on the island. But also in terms of the Robos bus tax program. Other places, US Virgin Islands or Guam or whatever, you can move there and also not avoid US Federal taxes. The issue is that they just don't have the same program that Puerto Rico does to really motivate people to move down to the island.

[Joel]

Cost of living too. Let's say it costs more to live in Puerto Rico, maybe it wouldn't be worth it for the tax savings you might enjoy. I've seen split opinions on this. Some people say, yeah, it's cheaper to live in Puerto Rico. But then others have said, well, but if you live in one of the fancier neighborhoods where it feels like you have to move to to enjoy life like you might have back in the States, then it's actually pretty expensive. So, yeah, what about those wealthier neighborhoods and what is the cost of living like comparatively?

[Rachel Ferris]

Yeah, the wealthier neighborhoods are definitely expensive. So when you're talking about big kind of gated resorts like Dorado Resort, Palmas del Mar, there's a new one coming up for Moncayo and Fajardo. Those can definitely get in the multimillion dollar range. And the reality of that is, is that there are very few properties within those complexes. You get access to all the resort amenities, security 24, seven, you're surrounded by all expats essentially. And a lot of people do decide to take that route. But I also see people that actually love living in old San Juan, San Juan, Condado, a lot of areas where actual Puerto Ricans live. And that cost of living is much less than the US and it's not necessarily at a lower standard. It just means that you're not living in this resort community that has seven different pools and a water park and private beaches. You probably need to go down to the public beach, but you are in a nice apartment building or you have a nice home that is probably as nice, if not nicer than the house you may have in the US for the same price. So it really, really, really depends. Honestly. I personally spend a lot of my time in the resorts and I really love it. But I actually spend a lot of my free time with friends socially in Condado and San Juan. And I feel like that's kind of the exciting area where all the good food is and you're not just trapped in kind of like an all inclusive resort, what it seems like, yeah, I.

[Joel]

Think I'd get tired of that really quickly. I did an all inclusive one time and I was like, get me out of here. It's, it's really fun for like two days. And then it gets like, some of those neighborhoods sound like a little ostentatious and not my jam. So it's good to know that there are other kind of places that you can move that don't cost quite that much and that could be a Little more vibrant and interesting. I'm curious too when people are asking you about this potential move down to Puerto Rico and are they at all suggesting, well, what if I move to just a really low cost of living country that more Americans are choosing anyway? Is that like a better option? So like I visited Thailand and it was shocking how cheap it was to live in Thailand. So even if I'm paying tax on my income, boy, Thailand might be a better option for me just as a geo arbitrage play because it's so much less expensive from a cost of living perspective. So what, yeah. What's your take on, on some of those really cheap places you can land in other, other parts of the world versus kind of going all in on Puerto Rico?

[Rachel Ferris]

Yeah, I mean I think it's everyone's situation to their own right. If you're Thailand, you are halfway across the world. If you're in Puerto Rico you are just usually one flight away. Unless you're coming from the west coast. They have a lot of direct flights down from kind of the central part of the US and the east coast coast much closer. Especially if you have family or friends that you want to stay in contact with in terms of cost of living. Yeah, it is definitely a lot cheaper in Thailand than it is on the island of Puerto Rico. The reality is though is that you're dealing with a different set of issues. I mean I went to Thailand and I know you can't drink the water there. You have to worry about food safety a bit more. Puerto Rico is the United States still. You do not need to worry if you drink the tap water. You do not need to worry if you're eating at a restaurant that you're going to get food poisoning. So it's much more similar to the style of life that we are used to living in the US they have huge malls that have all the stores that you're looking for. You know, you're not necessarily going to a country that is still developing. I would say the other big part of that too is once again the taxes. You do need to still pay tax on your worldwide income while you're in Thailand. There are certain credits obviously that you can credit against that. But the end of the day you're still having to deal with the complications of cross border tax rules. Whereas here in Puerto Rico you have the IRS that understands Puerto Rico's situation a little bit more. You have practitioners in Puerto Rico that are extremely familiar with US Rules. And so it's a much simpler process to remain in compliance.

[Joel]

Talk to me about the tax benefits, then drill down just a little bit because you mentioned it right at the very top. And how significant are the benefits and how difficult are they to qualify for? Because there's definitely some specifics that people need to be aware of. It's not like you can have, you know, $5 million in your taxable brokerage account, move down tomorrow, sell it all, not pay capital gains tax, and move back the very, the very next day and just be like, sweet. That was awesome.

[Rachel Ferris]

Yeah, definitely. So I'll talk a little bit about what the actual benefits are first and then we can kind of go into eligibility and compliance. So the benefits across the board, there's actually a lot with under Act 60, but the most too popular decrees are the individual investor decree, which offers the 0% tax on short and long term capital gains, interest and dividends that are sourced to Puerto Rico. And then there's the export services decree, which is that 4% corporate income tax rate. So really, to qualify for both of these, it's just an application. For the most part, you do need to meet three main tests, which are the presence test, the tax home test, and the closer connection test. The presence test is kind of the 183 days. There are actually five ways to meet it, but I would say the most common way to meet it is spending 183 days in Puerto Rico. Rico, the tax home test is, hey, where is your business actually located? So, you know, if I own a company in New York and I am flying back and forth for business in New York, and I never create a business down in Puerto Rico, you're not going to meet the tax home test. And then the closer connection test is the most subjective of the three. And this is really what I call the heart test. It's where does your heart actually lie? Did you actually make an effort to move to Puerto Rico? So a lot of the times it looks like moving church and religious organizations, moving social organizations down to Puerto Rico. If you have a wife and you are moving down to Puerto Rico, your wife and your kids should come with you. They should not remain in California. You should move down to Puerto Rico and not be staying in an Airbnb or hotel. You need to be staying in a house that you're leasing or buying. There are a lot of things that kind of come into this, but the whole idea behind it is that you are intentional with your move. You have actually moved to Puerto Rico and left your previous state of residence. And so those are kind of the best ways to comply with Bona fide residency rules.

[Joel]

That makes sense because if Puerto Rico is going to dish out those tax benefits, they want to make sure that there's some buy in, right? That you're going to stick around for a little while, that you are actually going to actively invest and that you're not just there as a tax dodge. Talk about how long people typically stay for. Are people moving permanently because you mentioned a two year rule that buying a house becomes a requirement or are people saying, this is just a kind of a seasonal thing? For me, I'm going to stay here for a few years, I'm going to kind of take advantage of some of those tax breaks and then I'm going to head back to the mainland.

[Rachel Ferris]

I see a huge mix of both. I have clients that want to stay for the rest of their lives or want to stay for at least 10 to 15 years. I also have clients that are like, hey, I don't see this being longer than like a three to five year thing. And I think both are okay. I will say, while there isn't a specific rule about the number of days or number of years you need to stay in Puerto Rico, a lot of residency rules on the IRS and Puerto Rico side of things revolve around a three year rule. And so what I advise most of my clients is that you stay for a minimum of three years. And that is basically for purposes of an audit. It looks like you actually moved. It makes it look like you made an intentional effort to go down there to spend time there. And I think even a bigger point is not necessarily the amount of years you spend down there, but it's what you did with your life in the US Right? So a lot of people love to keep their house available for you. So, you know, I'm from San Diego originally. I actually had a client that is from San Diego. They wanted to keep their house in San Diego so they could go back and visit. I was like, hey, you don't need to sell your home, but you should rent it out long term at arm's length to someone you don't know. When you come back to the US you should have to bring a suitcase. You should not have a house that has the exact same fixings that you would have in Puerto Rico. You need to make it look like you've moved, especially in high tax states where they really want to come after you. You have to make it look like you've left that state permanently and that you've established a life in Puerto Rico. And that's where I see most People getting caught up.

[Joel]

Yeah. Okay. What about additional expenses? So you're talking about like plane tickets then. Right. Traveling back and forth. But you're also talking about if you, if you have kids. I've just seen some of the people who move down there and the buckets and buckets and buckets of stuff they have to transport, like the travel day can be a nightmare. But also once you get down there, private school for some of those people, they feel like that's a necessity. So the, the cost of family that a family bears can be significant with a big move like that?

[Rachel Ferris]

Yeah, no, definitely. And a lot of people do decide to homeschool. There are a few private schools on the island. I believe a couple of them actually have connections with the Miami private school district as well. So there is kind of some type of continuity with education with the United States. That being said, it obviously is different than if you were going to public school school in California. You're not going to be doing Common Core like they do in California. It's going to be a new type of education. I've heard a lot of people actually happy with that level of it, especially at a private school. But those that don't want to send their kids to private school, I usually don't see people going to public school. I oftentimes see that being a homeschool route or some type of online school for their kids. I completely understand it's really hard to up your life with your children. And I think when people always ask me, well, what dollar amount do you need to move down? I think it really depends. If you're 30 something years old and you're big in crypto and you have investments, you might be able to move down at a different price point than someone that has a family with kids and their kids are now in middle school, it's really hard to pull them out. If your kid's one or two years old, they're not going to notice a huge difference for a few years. But if they already have friends in school, I personally wouldn't uproot my kids life for a certain amount of money unless this was going to set them up for the rest of eternity. So I get a lot of different opinions on that, a lot of personal.

[Joel]

Factors to consider as well as tax implications. So in speaking, which I want to dig in a little bit more to the tax stuff and then also just kind of, who does this make sense for? Because you're right, like the stereotypical crypto bro who has built up a significant amount of money in his or her portfolio, well, then it might make more sense for them to avoid taxation and bite the bullet and move down to Puerto Rico. But then for others, like a teacher or something like that, maybe it doesn't make as much sense. So we'll get some questions on that front with Rachel right after this.

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Yeah, as someone with an active online presence, partly because of what I do, it's a necessity. Privacy is really important to me. I've mostly avoided social media for that very reason. And so, in an age of interconnectedness, paying attention to your online data is a must. Maybe you have been a victim of identity theft or harassment or doxxing. If you haven't, you probably know someone who has.

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[Joel]

All right, we're back, still talking with Rachel Ferris, talking about Puerto Rico. Is it the island of your dreams, the perpetual Caribbean vacation where taxes don't exist? The way sometimes Rachel, you describe it sounds a little heavenly. It's like this little slice of sand and sun down in the Caribbean and you don't have to pay taxes. It sounds too good to be true. We were talking about that earlier, but I guess can you talk more maybe about the individual investors? I think some people have a business and they're like, oh, this would be a great way for me to move down and avoid paying taxes on my business income. But I'm guessing a lot of the people who are listening would call or be more interested in the individual investor side of things. So how does that work and how does that work too for W2 employees? Let's say you can work from anywhere. What's the tax status look like if you live in Puerto Rico but you work for a company back in the States?

[Rachel Ferris]

Yeah. So let me touch on the individual investor first. So essentially, I'll give you a great example. Let's say you've held Apple stock for 10 years and you move to Puerto Rico and you sell it year after you move. Well, you're going to mark down the value of that Apple stock. Anything that is publicly traded on the day that you've moved down to puerto Rico. The 10 years of appreciation before you move to Puerto Rico will be taxed at US Rates and your state tax rates. The one year after you move to Puerto Rico will be taxed at Puerto Rico rates. And so if you're expecting to move down, hey, I have all this money in crypto Or I have this huge investment portfolio, I want to do a huge exit. Reality is you'll need to spend more time in Puerto Rico and expect that stock to go up a bit to make the move worth it. You won't be able to capture those gains that happened before you actually move down to Puerto Rico.

[Joel]

But all the trading you do once you move down to Puerto Rico, let's say, then you're talking about capital gains tax free. But if you have a portfolio and you sell it when you're down there, sorry, you're still subject to paying the United States Uncle Sam its fair share.

[Rachel Ferris]

Yes, you have to pay their fair share again if you hold that Apple stock for another 10 years. Once again, the 10 years after you move, that is going to be Puerto rico tax. The 10 years beforehand is going to be US taxed. What I see a lot of the times with kind of situations like this is that people, when they expect their stock to go up, they expect an investment to kind of do well in the next few years. They want to get down to Puerto Rico sooner to be able to capture that actual gain. I think the big thing to note is that when you're actually trading, so let's say you're spending that 183 days in Puerto Rico. You need to commence trades while you are physically located in Puerto Rico yourself. So just because you're a resident for that year doesn't mean I could be on vacation in New York and then decide I'm going to sell my Apple stock. You need to sell it while you're physically located in Puerto Rico to ensure that everything is actually captured as a Puerto Rican gain. I don't want New York to have any type of claim because you clicked a button on your computer. You should be commencing every type of trade while you are physically located in Puerto Rico.

[Joel]

Okay, so what about then income? Working from afar or. Yeah, so if I can work from anywhere and I can move down to Puerto Rico, how does that impact just a paycheck I get from an employer?

[Rachel Ferris]

Yeah. So for a regular W2 employee, generally this doesn't work. But I found a lot of different ways that W2 employees have been able to make this work. And so one of those options is having your employer actually allow you to work out of Puerto Rico and have a Puerto Rico entity. So if they're willing to say all the work you're doing is entirely out of Puerto Rico, you can actually qualify for these benefits. A second option I see is becoming a contractor. So I actually have probably about 20% of my clients, they worked with big employers back in the US and reached out to them to say, hey, I'm thinking of moving to Puerto Rico. They weren't open to creating an entity in Puerto Rico, but what they said is, hey, you can be a contractor, create your own single member llc and we will pay you that salary basically as a contractor. And then you can take advantage of that 4% corporate income tax. And it's a lot more common than you think for employers to be okay with this. Actually, I would say most people that reach out to me about it have around a 70% success rate on employers being okay with one version or another. The third option is a difficult to hire or a difficult recruit to employee decree. So if you are someone in a skilled position and you want to move down to Puerto Rico, your company can actually open up a position in Puerto Rico and say, hey, we can't really recruit for this type of position in Puerto Rico. They don't have the skilled labor for it. We want to recruit someone from the US to move down and then you can get hired under that decree. The first $100,000 of the salary that you get for that year will be taxed at normal Puerto Rican rates. You will not have to pay federal tax on that. Everything after the $100,000 is 0% tax. So it is a really great benefit for people that are in highly skilled positions. I often think this works for software engineers or people that have something very tangible. This isn't great. If, let's say, you are a plumber and you want to move down to Puerto Rico. The idea behind export services is that you're exporting services off the island. So you're not providing services to people located on the island of Puerto Rico. You're providing it to people in the US you're providing it to people internationally. And so if you need to be physically like a dentist with your hands in someone's mouth, this isn't going to work for you. But if you're a lawyer, a software engineer, any of the things where you can work with people, other places virtually, it works very well.

[Joel]

As we've seen recently in the states, tax law is subject to change, to debate, to political party influence. And so you can't really necessarily rely on even hosting the show we're talking about. Well, future tax rates could change. And so what do you do in the event there's a lot of stuff that's not completely knowable. So what's your take on the durability of these laws and whether or not people should uproot their lives to try to take advantage of a tax break that could sunset at some point.

[Rachel Ferris]

Yeah, that's a great question. And when you actually get the decree, you sign a contract with the government for 10 to 15 years, depending on your type of decree. So you have that guaranteed rate for 10 to 15 years versus in the United States, you don't sign a contract with the government every single year telling you what your tax rate's going to be next year, five years from now, 10 years from from now. This is a guaranteed set rate.

[Joel]

In fact, we'll be debating the new tax rates again in 2029 because of sunsetting rules.

[Rachel Ferris]

Exactly. And so here you have a guaranteed contract with the government. And the great thing about this contract is if they end up offering a better incentive, you can switch to the better incentive. Now, if they make it worse, it's not necessarily grandfathered in where you have to go back to the worst program. You get to keep the best benefit that they offer. And so if they start offering a program where, hey, that 4% corporate income tax rate is chopped down to 2%, you can upgrade your decree to the 2%. Now, if they tell you, hey, next year we're switching that to a 10% corporate tax rate, you're stuck with that 4%, luckily for the next 10 to 15 years, depending on your decree. And so it's a really great way to tax plan because there isn't necessarily volatility with it. It is set in stone. A big concern I do see though is that this program for Act 60 isn't necessarily extended indefinitely right now. It is until 2055, I believe. So for most people in their lifespan right now, very reasonable. Before this, it was supposed to Sunset in 2035, I believe, but they had so much success from this, they've extended another 20 years. So I don't think this is a conversation we need to really worry about at this point in time. If we get closer to 2040, 2055, somewhere around there and they still haven't renewed it again, that's another thing we can bring up. But for most people, that's not going to be an issue.

[Joel]

We've got some fire aficionados in our audience who they love the idea of front loading the pain, investing large percentages of their salary so that they don't have to work. At least they'll work optional life once they reach their mid-40s or maybe even earlier. For some people who are really getting after it, they can just completely decide whether or not they want to continue working for money. And how do you think that the fire crowd and Puerto Rico tax benefits overlap?

[Rachel Ferris]

Oh, they're going to love this. And actually, a lot of people come down with that exact same mentality. They want to achieve financial freedom at an earlier age. And what better way to do it? By securing those tax gains back to yourself, you're not having to pay the government. You're able to either get financial freedom, retire earlier, or get a competitive edge on your business. I see most people, especially younger people, going down to Puerto Rico and being like, I'm going to stay there for five years. This is how much money I'm saving when I go back to the US If I want to explore a new business venture, great. If not, I am just going to coast the rest of my life and I'll never have to worry about a dollar. Especially when you're thinking about big tech people in San Francisco or big finance guys that are day traders in New York. Right. This is a perfect way to capture that within a few years of your life and quote, unquote, sacrifice to really be able to optimize your financial future. Now, I don't think it's as much of a sacrifice as fire is, where it's like, hey, you're gonna cut your costs and you're just investing everything. You're gonna live kind of measly so you can live bigger later on. The quality of life in Puerto Rico is great. You are probably going to live a higher quality of life than you did in the US you are living in a beautiful island that has great weather most of the year. Like, I think for most people, they don't see it as a sacrifice necessarily. It's almost an upgrade.

[Joel]

I feel like when Puerto Rico gets discussed, the crypto thing gets thrown in there frequently. There's a decent population of crypto enthusiasts and investors. Can the tax savings. We're fine with people owning a small amount of cryptocurrency, Bitcoin in particular, but typically we talk about index funds. Hey, index funds are the tried and true boring path to building wealth. That's a great way that we talk about investing and a way a lot of our audience goes about investing. So are the savings or the tax savings the same for people who invest in cryptocurrency and index funds or. Well, yeah, how would you chop that up?

[Rachel Ferris]

Same thing. They are all basically, like, available to for trade stocks or securities, essentially. Crypto especially works well. Stocks work well. Index funds work well. It gets a little more complicated when you're talking about something that is off the market. So if I'm investing in my friend's company, that's a little bit hard to value. And so that generally comes with a valuation study. But for anything where you can get an active dollar amount on it, totally fine. The only thing I will say to be a little concerned about is if you were going the hedge fund route, and I think that's a lot less popular unless you are quite high net worth. But the idea of a hedge fund manager is they're actually initiating the trades for you. And so because of that, that tends to be sourced to where they are located, not sourced to where you are located. But I've never had clients have issues with index funds, and a lot of people end up using the extra money to explore new types of investments. So I have a lot of people that are doing box spreads now. Right. So they liked index funds, they liked the security, the low risk. Right. And they found that box spreads were a really great option to also get a very low risk investment with sometimes a higher return and get that source back to Puerto Rico. There are some really great financial advisors in Puerto Rico as well that can assist you with that. There are people that literally only specialize in helping getting all your investments, Puerto Rico sourced. And so those are great conversations that you can kind of have with one of those people if you do decide to move down.

[Joel]

So when the rubber meets the road, when you're talking to people, what sort of thresholds do they need to meet to make it make sense to even consider this? So obviously there's a lot of personal factors. We talk about kids and schools and community, all that stuff. There's a lot of reasons I'm not moving to Puerto Rico even after talking to you. But I could see it for certain people in other phases of the their lives and who have other goals and, you know, other tax situations that they're dealing with, saying, oh, yeah, I think this, I should at least consider this. What sort of questions would you ask them to help them decide whether or not this made sense? And like, is there a way even maybe to look backwards at how much tax you've paid in recent years and say, oh, I think, I think you, it would make sense for you, or actually you're not really in the ballpark, you're not paying enough tax where this sort of move would make sense?

[Rachel Ferris]

Yeah, So I don't love to give a dollar amount for people because $10,000 means something different to me than it might mean to you. Right. And so I have people that move down making maybe $200,000 a year and they're like, wow, these tax savings mean so much to me. I have people that I talk to that make $20 million a year that are like, nope, not worth it to me. So I don't love to give a dollar amount for that. But what I will say, the question I always ask is, are you actually willing to move for at least three years of your life? I get a lot of questions, hey, can I just VPN down? Oh, can my wife and kids stay back there? Oh, I want to maintain my life in the US And I want to go back all the time and spend weekends in Puerto Rico. The reality is, is that you do need to move for three years of your life and if that is not something that you'd even be willing to consider, then I don't think this is the program for you in terms of who else this would fit for. I mean, investors, entrepreneurs, people that have a side hustle even. Right. People that are W2 workers that think that their employer will be flexible. There are a lot of different ways that you can kind of look at this. I don't think there's a one size fit all model besides the fact that everyone that moves down is actually willing to move and commit to a life down there for usually about three years.

[Joel]

Okay, a few more questions for you about Puerto Rico, what it's like to live there and kind of some of those trade offs that people are going to experience if they do say, yeah, I want to pay less in tax, so I'm going to make this jump. We'll get to a few more questions with Rachel right after this.

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[Joel]

Yeah, as someone with an active online presence, partly because of what I do, it's a necessity. Privacy is really important to me. I've mostly avoided social media for that very reason. And so in an age of interconnectedness, paying attention to your online data is a must. Maybe you have been a victim of identity theft or harassment or doxxing. If you haven't, you probably know someone who has.

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[Joel]

All right, we're back from the break. Still talking with Rachel Ferriss about axing your tax bill by moving, by leaving where you live and all that. You love to go someplace foreign and new. Just kidding. I'm sure Puerto Rico is. I'm curious, what is the expat population of Puerto Rico now, Rachel? Because, like, are people going to feel like they're running in similar circles with mainlanders? Or is it like, what's the cultural shock of moving to the island of Puerto Rico these days?

[Rachel Ferris]

Yeah, I Mean, I'm not going to sugarcoat it. It is different in some ways. You can find communities of fully English speaking people that feel like you're at home. I know I spent a good chunk of my year down there. And when I go down there, besides the nice beaches and the warm weather, I find that most people I'm interacting with are very similar to the people I'd be interacting with back in California. That being said, when I leave those expat communities, it is predominantly Spanish speaking. And I'm not saying you need to learn to speak Spanish. You can get by with English, most people know English, but again, it is a little bit of a culture change where you're seeing menus in Spanish. You're having to deal with, you know, getting your driver's license, and you're having to deal with setting up utilities. And sometimes they don't speak English or sometimes the repair guy doesn't speak English. Right. I found that most people don't have huge issues with that. There are very good expat communities that can refer you off to the best people. So rather than finding some random handyman on Yelp, you can talk to your neighbor and they're like, oh, we use this guy all the time. He's super reliable. He's easy to communicate with. Boom. Super easy. And I would say the big thing that I do notice for people, though, is one, sometimes the quality of service is a little different. So especially, you know, girls like to get their nails done. They get to like to get their hair done, might get, like to get their hair dyed. A lot of people actually end up still going back to the US for things like that just because they're used to kind of a certain level of service. That being said, things like dental and healthcare, it's decent down there. If you're gonna get a big surgery, I would say go to the United States, don't get the surgery done in Puerto Rico, but if you're doing regular kind of screenings and you just have your primary care doctor in Puerto Rico, completely fine. Most of the people are actually trained in the US and then they move down to Puerto Rico. So you're getting a pretty high level of service. I think the other big thing to mention is the electricity grid that is always, always, always in the news. Reality is, is that if you were coming down as an expat, hopefully you have a certain amount of money to get a place with a generator. You usually don't have any issues. I personally have never had an issue with electricity at my place. My Building has a generator and it just snaps on like that. I. The lights will go off for like a half a second. And I've never had a problem with it. I do know people that decide to live in areas where maybe it's not the higher quality of living. And I'm not talking about, like, the nice areas of San Juan and Condado. I'm talking like they're living Rincon by the beach in a little shack because they want to surf all the time. Those people tend to deal with those electricity issues a little bit more.

[Joel]

Okay. And hurricanes. That's another issue that you deal with when you live in Puerto Rico. How big of a problem is that? Because I would think that be. That could be a little. A little frightening to live there during hurricane season.

[Rachel Ferris]

Yeah. So here's my hot tip, because I, since I've been living there, I actually have never experienced a legitimate hurricane. Obviously you had Hurricane Maria back in 2012. That just wiped things out. My tip is, what I do is if I hear a little musing about a hurricane coming, I book a refundable flight for every single day that week. So Monday, Tuesday, Wednesday, Thursday onwards. And if I don't feel like I need to leave, refund the flight. Refund the flight, Refund the flight. If I do feel like I need to leave, boom, I have a flight already ready for me. There are some great airports in Puerto Rico. Very easy to get off island. And so that's what I really suggest for most people. Again, if you're not living right on the beach, you shouldn't have an issue if you're living in a bigger building. My building is concrete, nice, new. I have never worried about flooding or windows being broken or things like that necessarily. If you're in a standalone home shack right on the beach, yeah, you probably do have something to worry about. But a lot of people end up traveling during that time, or if they do need to stay on the island, they do the flight trick. Like I just mentioned, hurricane season is generally through kind of late summer, early fall. And so it's kind of the perfect time to escape the heat of Puerto Rico and go see family back in the US or go to Europe and travel for a bit or check out another place for the summer and enjoy your time. A lot of people don't even live there during hurricane season, so it's not something you need to worry about.

[Joel]

You mentioned the hospitality of the locals, but I've seen too that there has been some pushback. Like I was in Hawaii recently, and I Saw these signs up, these like anti resort building signs. So even in, you know, the actual like United States, a state in the United States, there are, there are people who are against some of the forms of tourism that happened and they don't, they don't want to see some, maybe their, their precious local resources used by people they don't perceive as, as locals. So I have seen some of that pushback. What does that look like? What sort of frustrations exist? And then how do people that you have helped move down there deal with that?

[Rachel Ferris]

Yeah, that's a really great question. Yeah, there obviously are people that are discontent with it. I will say it's less on the government side and sometimes more on the actual people living their side. We don't see protests or things like that within the communities. It's a lot of times more discontent towards the actual politicians that have put it in place. Not necessarily against the foreigners who are spending their money. Most people actually like the fact that, you know, people are spending money in the economy. What they don't like is that real estate prices are going up in some of those more expat areas and it's pricing some people out. And that's really unfortunate. What I found though, is that the way that the government has kind of circumvented this is that they actually require as part of your decree to give $10,000 every single year to a Puerto Rican charity. And so that's really helped kind of rebrand the idea of what Act 60 really looks like. You're helping out local people. $5,000 of that actually needs to go to eradicating child poverty. And so you're helping uplift the population in a lot of ways possible. They sometimes require people as part of the decree to go to career fairs or to speak on different boards or different appearances every single year to really engage with the local community. Obviously there are still people that never leave their little resort community, but as a whole, I think especially in the areas with a lot of expats, yes, people are discontent with the housing prices and that there are some unfair parts of Act 60, but a lot of people are very happy about the income coming in. And one thing that the government actually did to make things a little bit more equal is that they're now allowing Puerto Rican residents that are local, not necessarily Act 60 participants, to also take advantage of some of those taxes tax rules, so that 4% corporate income tax will now be allowed to be applied for by local Puerto Ricans as well. Beforehand it was just reserved for expats and people moving down. So they're trying to even the playing field a little bit more now that they've gotten that money coming in. So I think people are. It's starting to look up, at least on a lot of those attitudes. And overall, I mean, it's brought multi, hundreds of millions of dollars essentially into the Puerto Rican economy. That a lot of the areas have improved multifold, especially in Dorado and the popular areas.

[Joel]

No, it makes sense. It makes sense as an island that's trying to incentivize investment and revitalization that bring people down even with those tax benefits that they offer. That's the incentive. And then hopefully those people stick around and they are doing good in the community. I'm curious, what would you say to somebody who's been listening and they're skeptical or they're like, it's interesting and it's cool, but it sounds like maybe it's for people with like yacht sort of money or like it's. It's not for people like me. What would you say to those people?

[Rachel Ferris]

I think Act 60 is a great example of understanding the rules of the game. This used to be something that was only accessible to the ultra high net worth that were able to get this information. And slowly and slowly it's starting to open up to more people. I think that if you want to secure financial freedom for yourself, this is a great opportunity. You don't need to be making tens, millions, hundreds of millions of dollars to take advantage of this. In reality, your decree will get approved. And even if you're only saving a couple tens of thousands of dollars a year, if that's worth it to you for a few years of your life, it's pretty easy to get down there. I would suggest reaching out to professionals like myself. A lot of us offer free consultations where we can talk you through what eligibility looks like. Like we can go through your previous tax returns and say, hey, this is the amount you would have saved in the last five years if you actually moved down. It'll give you a really great picture for it. And most people just want to inform people about the benefits of Puerto Rico. So reach out to any of the professionals, hear about it. And in reality, what you should understand is, yeah, a lot of the clients I do have are multimillionaires. I actually have a client right now that makes $0. They're starting a new business. So there is a huge spectrum of people moving down. It's just more about the attitude behind moving. So don't be afraid if you're making 100, $150,000 a year. If it's worth it to you, it's worth it to you. And it's easy to file through the process. Compliance is a little bit trickier, but if you are a one man operation, you're just dealing with investments, you're going to be pretty simple. It gets more complicated and the fees get a lot heavier. When you have multinational organizations and international entities and trusts in the states you're dealing with. If you're just, you know, Joe Schmo out of Ohio and you want to move down and you just have a lot of investments and you want to check it out, it's going to be a pretty easy process for you. And I wouldn't be overly concerned about qualifying or eligibility.

[Joel]

Okay, Rachel, this has been an enlightening conversation. Thank you so much. Where can listeners find out more about you if they're curious?

[Rachel Ferris]

Yeah, definitely. So I have a online education [e-mail] it walks you through just the basics of what Act 60 compliance look like, how to file the application, application, how to look at compliance even after you apply, there's a free kind of little preview on there as well that you can look through. Alternatively, if you want to talk to me, my website is rachelfariscpa.com I offer free consultations to anyone who's looking to move down. You can read some of the articles on my website, get a better picture for what Act 60 looks like. Or you can just book a call with me and I'd be happy to talk you through everything.

[Joel]

Awesome. Thank you, Rachel. Appreciate it.

[Rachel Ferris]

Of course. Thanks, Joel.

[Joel]

Okay, so that was a fun conversation and interestingly, it's one I debated a lot before inviting Rachel on the show because I was like, I don't know, this is one, this seems like one of those tax dodging strategies for multimillionaires sorts of things. And I know that the how to Money audience like wants to be multimillionaires someday, but we're mostly normal people, right, Offering advice for normal folks to be able to make progress with their personal finances on the margins and eventually achieve financial independence at vastly earlier rates than most people. But I think Rachel made a good point in there. And probably my big takeaway is that, yeah, it's really hard to set a guideline and say that a person needs to have a $10 million net worth or $100,000 salary. Well, that's not going to be enough savings. So much of it depends on what your, how you value $10,000 and the trade off of moving elsewhere for years in order to realize tax savings. And so I thought this was actually one of the things that this highlighted. For me, this conversation was just the fact that when you look for tax savings or when you have an idea of this is what Rachel addressed kind of at the very end there of how the game works, it helps you wrap your mind around it a little more. And maybe you find tax savings in places that you didn't otherwise assume. So even, even on the mainland United States, right, There are tax benefits such as real estate professional status. If you are a real estate investor and you know more of your time is spent doing real estate than it is doing your day job, there are significant tax benefits you can receive or there are opportunity zones for real estate investors. I mean, there's all sorts of different tax benefits that incentivize us to do different things. And this is just a really, really big one, right? Like big tax benefits for a big move in order to attract investment to an island that was under capitalized and that didn't have the sort of capital that it needed to get built up and thrive. And so I just, I thought this was interesting and my guess is that the vast majority of you aren't buying plane tickets and moving tomorrow. But I hope you found it at least enlightening and it got you thinking about what am I paying in taxes and are there interesting ways that I can save that I hadn't thought about? And I don't know, maybe for a small handful of you, you might say, actually, I didn't realize that I could save so dang much and run my business from Puerto Rico and pay a heck of a lot less in tax or be an investor in Puerto Rico and save a lot. And maybe that piqued your interest enough to look into it a little bit further. But definitely an interesting conversation. And while I'll be staying put, keeping my kids in their schools and staying close to friends and family, you might have other priorities. All right, that's going to do it for this episode. Hope to see you back here on Friday for our Friday flights, where we cover the news stories from this week and how they pertain to your personal finances. Until next time, best friend out.

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