Puerto Rico is a beautiful Caribbean island that boasts a tropical climate, lush vegetation, and a rich history and culture. It’s no surprise, then, that people from all over the world not only want to visit, but choose to purchase property in Puerto Rico, either as a primary residence or for vacation purposes.
But what happens when people pass away? Where does their property go and how does inheritance tax affect the estates left behind? Having a proper will in place can alleviate many potential inheritance issues, but not everyone has the time or the foresight to pen a last will and testament.
As a result, you may find yourself facing a bevy of questions pertaining to Puerto Rican inheritance law when a loved one dies. You should always speak with a qualified lawyer in Puerto Rico before proceeding since every situation has its own particular hassles, but here are a few common questions answered.
How Much Will I Pay in Taxes From an Inheritance?
This may depend on whether or not the deceased was a resident of Puerto Rico or not. In Puerto Rico the estate tax ranges from 18-50% of the net taxable value of any property you inherit. If your deceased loved one was a resident of Puerto Rico, this applies to all property. If not, it only applies to property owned in Puerto Rico.
However, the amount of the estate that is deemed taxable is determined following funerary costs, the disbursal of decedent debts, and charitable gifts bequeathed by the deceased. In addition, there are also fixed exemptions for residents, nonresident U.S. citizens, and nonresident aliens (that aren’t U.S. citizens).
Can I Inherit Property as a Non-resident?
Absolutely. If you are the spouse, child, or in some cases, other relation of the deceased, you can automatically inherit property under Puerto Rican law. Property may also be willed to inheritors.
What is Forced Heirship?
Forced heirship can be difficult for Americans to understand. By U.S. laws, spouses automatically inherit the estate of the deceased, even if they are not listed as joint owners on property. The same is not necessarily true in Puerto Rico.
The basic idea of forced heirship is that the children of the deceased are given preferential treatment when it comes to inheriting property. In some cases this even supersedes a will. Spouses are generally entitled to some share of the property, but children, grandchildren, surviving parents, and other relatives of the deceased may also have some claim through forced heirship.
If you have inherited property in Puerto Rico through will or forced heirship, it’s best to discuss the situation with an experienced Puerto Rican attorney who can guide you through the process.