The Puerto Rico Association of REALTORS® (PRAR) formally submitted its comments on Senate Bill 912 (P. del S. 912) to the Senate Treasury Commission, addressing its potential impact on Puerto Rico’s tax system and the real estate sector.
This legislative measure proposes amendments to several sections of the Puerto Rico Internal Revenue Code of 2011, with the stated purpose of reducing the tax burden on taxpayers in Puerto Rico.
Below is a summary of PRAR’s position and the projected impact of the bill on buyers, sellers, investors, developers, construction professionals, and financial institutions.
Impact on Residential Buyers and Sellers in Puerto Rico
PRAR recognizes several positive aspects of Senate Bill 912 that could benefit individuals and families participating in the residential real estate market.
Increased Purchasing Power
The proposed reduction in individual income tax rates and adjustments to personal exemptions would leave more disposable income in the hands of consumers.
This may:
- Improve mortgage qualification ratios
- Increase access to homeownership
- Strengthen demand in Puerto Rico’s housing market
Greater liquidity among middle-class families supports a more stable and accessible real estate environment.
Capital Gains Exemption on Primary Residence
The bill reaffirms public policy exempting capital gains from the sale of a primary residence.
This measure:
- Reduces hesitation among homeowners to sell
- Encourages inventory movement
- Facilitates mobility within the housing market
By removing tax uncertainty in primary residence transactions, the legislation supports healthy market activity.
Inflation Protection
Indexing tax brackets to federal inflation helps prevent taxpayers from moving into higher tax brackets without a real increase in purchasing power.
This contributes to long-term housing demand stability and financial predictability for families in Puerto Rico.
Impact on Real Estate Investors and Developers
Senate Bill 912 introduces important structural changes affecting investment properties and development activity.
Flexibility for Single-Member LLCs
The bill allows a single-member LLC to be treated as a “disregarded entity,” even when owned by a legal entity.
For real estate investors, this may:
- Simplify accounting processes
- Reduce administrative complexity
- Allow rental income to flow directly to the owner
- Avoid unnecessary double taxation structures
This change modernizes the framework for real estate investment entities in Puerto Rico.
Proposed Elimination of Solar Equipment Tax Exemption
Beginning in July 2026, the bill proposes eliminating the Sales and Use Tax (IVU) exemption on solar equipment.
PRAR expressed concern that this provision could:
- Increase development costs
- Affect sustainable construction projects
- Raise capital expenses for rental property owners
- Discourage energy-efficiency investments
Given Puerto Rico’s energy challenges, PRAR emphasized the importance of maintaining policies that promote sustainability and renewable energy integration in real estate projects.
Impact on the Construction Sector
Higher Sustainability Costs
Removing exemptions for solar equipment may directly affect:
- LEED-certified developments
- Green building initiatives
- Construction budgets for sustainable housing
This could slow progress toward environmentally responsible real estate development.
Workforce Retention
On a positive note, lower individual income taxes may help construction firms retain skilled professionals such as:
- Engineers
- Appraisers
- Skilled laborers
- Technical specialists
Competitive tax conditions can reduce migration and strengthen Puerto Rico’s construction workforce.
Impact on Banks and Financial Institutions
The bill introduces new informational reporting requirements and penalties related to banking transactions and financial services.
Financial institutions may need to:
- Update compliance systems
- Adjust reporting processes
- Strengthen internal controls
However, improved borrower net income could also facilitate mortgage approvals and commercial loan activity, supporting broader real estate financing.
PRAR’s Final Position on Senate Bill 912
PRAR supports tax reform measures that reduce the burden on Puerto Rico’s families and small businesses while promoting economic activity in the real estate sector.
The Association emphasizes that:
- Homeownership should not be penalized with additional property taxes or reassessments.
- Future tax reforms should avoid increasing costs tied to real estate ownership.
- Government efforts should prioritize efficiency, cost savings, and regulatory simplification rather than imposing additional charges on property owners.
- The permitting process and municipal tax structures should be simplified to encourage investment and development.
PRAR remains committed to representing REALTORS® across Puerto Rico and advocating for policies that strengthen the island’s housing market and economic growth.
About the Puerto Rico Association of REALTORS® (PRAR)
PRAR represents real estate professionals throughout Puerto Rico and works to:
- Promote ethical and professional standards
- Advocate for sound public policy
- Support real estate education and training
- Strengthen the real estate industry as a pillar of Puerto Rico’s economy
For more information about PRAR’s advocacy efforts and member initiatives, visit our website or contact our offices directly.
