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)

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.

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)

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)

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)

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)

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.

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)

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.

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.

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)

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)

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 |

Where to Learn More

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

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.”