Sarasota, FL asked in Tax Law and Real Estate Law for Puerto Rico

Q: Does one have to pay federal taxes on the sale of land or property in PR? Specifically on inherited property?

CRIM tells me that the only name on their listing is my father’s therefore my sisters and I are the only heirs. Someone wants to buy the property ( cash sale), according to them once we have the declaration of heirs the property is transferred and there are no closing cost or taxes to be pay on the sale. I understand that the property taxes need to be paid but do believe no federal taxes need to be paid.

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1 Lawyer Answer
Rafael  Pagan-Colon
Rafael Pagan-Colon
  • San Juan, PR
  • Licensed in Puerto Rico

A: What you say is not entirely correct.

As a rule, there is no inheritance tax applied. Once the declaration of heirs has been issued by the Puerto Rico courts, you need to procure a certification of value and a certification of debt from CRIM. With these certifications and a copy of the Declaration of Heirs Resolution, an estate tax filing is submitted to the Puerto Rico Treasury Department (Hacienda) to allow Hacienda the chance to validate that no outstanding taxes exist. Assuming that your late father was a resident of Puerto Rico, chances are that Hacienda will issue a tax waiver.

With the waiver and a copy of the Declaration of Heirs Resolution must be submitted to the Public Registry, to substitute your late father's property rights with you and your sibling's inheritance rights. THEN and only then are you and your siblings in a position to sell the property.

You and your siblings must appear for the signing of the sales deed, either in person or by virtue of a power of attorney, to subscribe the sale. For each of you who resides outside Puerto Rico, our Tax Code requires that a 15% retention be made at the point of origin (which would be upon the signing of the sales deed), and this amount must be consigned in Hacienda.

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