Dear Friends and Valued Clients

We are pleased to inform you about a significant legislative update impacting the residential rental market in Puerto Rico. The recently enacted Law 66-2025 introduces key amendments to the “Real Estate Market Stimulus Act” (Law 132-2010).

Below, you’ll find a summary of what you need to know.

Key Points of Law 66-2025

1. Extension of Tax Exemption for Residential Rental Income

• The tax exemption on income derived from residential rentals is extended for an additional 30 years: From January 1, 2011, through December 31, 2040.
• This measure provides fiscal stability to owners and investors who lease residences, supporting supply and helping keep rental costs more accessible.

2. Important Exclusion: Short-Term Rentals

• Those who rent properties as short-term lodging are NOT considered “eligible lessors.” According to Law 272-2003, short-term rentals are defined as those lasting less than 90 days.
• What does this mean?
  If your property is rented under modalities such as short-term or tourist rentals (Airbnb, Vrbo, and similar platforms), it is excluded from this tax benefit.
• This responds to the intention that the exemption only benefits residential rentals intended for long-term housing, not predominantly tourist or temporary use.

3. Tax Obligations and Additional Requirements

Although the exemption is maintained for residential rental income, property owners must still:

• Pay municipal business licenses (patentes municipales).
• File the volume of business return, as required by the Puerto Rico Municipal Code.

How Does This Affect You?

• Long-term residential property owners: You will retain the tax exemption until 2040 (as long as all requirements are met).
• Short-term/tourist rental property owners: You are not covered under this benefit and should plan according to the relevant tax impact.

Recommendations

• Review the type of rental arrangements you have and adjust your business and tax strategies accordingly.
• Consider consulting your tax advisor to maximize your benefits and ensure compliance with the new requirements.
• Stay alert to future updates, as the real estate market and legal framework may continue to evolve.

If you have any questions about how this law may affect your particular situation, please don’t hesitate to contact us.

Thank you for trusting our services!