Buffalo, NY asked in Real Estate Law and Tax Law for Puerto Rico

Q: My mother transferred 2 properties in my name as a living inheritance. Is there any way that I can avoid paying any tax

She still lives in Puerto Rico, and I would like to build her a home on a different property that my brother owns and would like to use some of the monies for the build would I still pay a capital gains tax?

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2 Lawyer Answers
Rafael  Pagan-Colon
Rafael Pagan-Colon
  • San Juan, PR
  • Licensed in Puerto Rico

A: Unless either real estate property is your primary residence, you'll be paying property taxes. Furthermore, if you reside outside Puerto Rico, the sale of either or both real estate properties will be subject to a 15% retention of the sales proceeds, which will be deposited with the Puerto Rico Tresasury Department (Hacienda); aside from applicable capital gain taxes, should you sell for an amount greater than the Property Registry value. In April of the year following the sale, you'd need to file tax returns in Puerto Rico in order to claim said retention.

Samuel  Landis
Samuel Landis pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Tax Law Lawyer
  • Beverly Hills, CA

A: There are a variety ways to address the tax issues described above. If your mother passes, then there may be an exemption from taxes called the Unified Credit. If she wishes to transfer the properties to you during her lifetime without a taxable consequence, then she may need to file a gift tax return. This questions is best addressed by her estate planning attorney

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