Buying real estate in Puerto Rico is a good lifestyle and financial decision. Not only is the island charming and beautiful, but paying little to no property tax is a huge incentive. There are a places online to look for your next dream house in Puerto Rico www.palmasmls.com with unique features to help you in your search. Here you will find real estate listings island wide.

The Buying Process!

Buying costs are low to moderate in Puerto Rico

How high are realtors’ and lawyers’ fees in Puerto Rico? What about other property purchase costs?

How difficult is the property purchase process in Puerto Rico?

Foreigners can freely buy property in Puerto Rico. To enter into a real estate transaction, it is important to hire a real estate agent as knowledge in Spanish is very much needed.

When an agreement has been reached, a deposit of 5% of the purchase price is usually paid by the buyer. The deposit is non-refundable if the buyer decides to back out of the transaction. In case the seller backs out, the seller will pay the buyer twice the amount of the deposit or earnest money provided.

The seller usually pays for the notary’s fees, and real estate broker’s commission (unregulated). The buyer, aside from the down payment, also pays for title insurance and documentary stamps on the deed. Additional costs may include appraisal and inspection fees. Property taxes, on the other hand, are prorated. Since property taxes are usually paid at the end of the year, the buyer and the seller share the expense according to the number of months each owns the house during the year of the transaction.

All real estate titles are recorded in the Registry of Property. The titles are further categorized into subsections according to the territory where the property is located. It is important to file the title of the property under the correct section to prevent any objections from the Registry officials, who check the title’s legality and requirements.

A foreigner can also take the corporate route to acquiring property in Puerto Rico. Costs for registering a property obtained through a corporation include US$300 for Corporate Resolution. This is prepared by a notary to authorize the representatives of the buying corporation to appear in the deed of purchase and sale. There also are additional costs for Internal Revenue Stamps. The whole process of registering a property by a corporation can be completed in around 15 days.
 

Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Currency:
Puerto Rico uses the US Dollar (USD).

Notary Fees:
It is mandatory that a notary prepares the sale and purchase deed. Maximum allowable notary fee is 1% of the property value for the first US$500,000 plus 0.5% of the amount in excess of $500,000.

Registration and Filing Fees:
Several fees must be paid to different offices such as the Municipal Revenues Collection Center (CRIM), Treasury Department and Registry of Property. These fees are minimal and are not expected to exceed 0.5% of property value.

Internal Revenue Stamps:
Internal Revenue Stamps are puchased to be canceled on the original of deed of purchase and sale and first certified copy of deed to be filed in the Registry of Property. The notary keeps the original while the certified copy is filed at the Registry. Before applying for registration, filing vouchers for the Registry of Property must be bought first. Internal revenue stamps and vouchers are acquired electronically by lawyers/ notaries.

Attorney's Fees:
Although not mandatory, it is highly advisable for foreign buyers to hire an attorney or lawyer. Attorney's fees may vary depending on location and the complexity of the transaction. Most lawyers charge a percentage of the selling price, about 0.5% to 1%, while some lawyers charge a fixed fee or on an hourly basis. Each party pays for their own lawyer.

Real Estate Agent's Fee:
Real estate agent commission is negotiable, typically between 4% and 6%.
 

How to Purchase Real Estate in Puerto Rico?

Foreigners can freely buy property in Puerto Rico. To enter into a real estate transaction, it is important to hire a real estate agent as knowledge in Spanish and English is very much needed. Make sure the agent is license ask for a copy of the Real Estate License.

When an agreement has been reached, a deposit of 5% of the purchase price is usually paid by the buyer. The deposit is non-refundable if the buyer decides to back out of the transaction. In case the seller backs out, the seller will pay the buyer twice the amount of the deposit or earnest money provided. Make sure the deposit is hold on an Escrow Account with the listing agent, ask for a copy of the deposit slip along with the account number where the money is hold. Never give the deposit directly to the seller.

The seller usually pays for the notary’s fees, and real estate broker’s commission (unregulated). The buyer, aside from the down payment, also pays for title insurance and documentary stamps on the deed. Additional costs may include appraisal and inspection fees. Property taxes, on the other hand, are prorated. Since property taxes are usually paid at the end of the year, the buyer and the seller share the expense according to the number of months each owns the house during the year of the transaction.

All real estate titles are recorded in the Registry of Property. The titles are further categorized into subsections according to the territory where the property is located. It is important to file the title of the property under the correct section to prevent any objections from the Registry officials, who check the title’s legality and requirements.

A foreigner can also take the corporate route to acquiring property in Puerto Rico. Costs for registering a property obtained through a corporation include US$300 for Corporate Resolution. This is prepared by a notary to authorize the representatives of the buying corporation to appear in the deed of purchase and sale. There also are additional costs for Internal Revenue Stamps. The whole process of registering a property by a corporation can be completed in around 15 days.

Limit of Liability/Disclaimer of Warranty: The information and opinions expressed herein are presented with the understanding that they do not represent any or all of the opinions of Elder Lopez or  www.Palmasmls.com member making this publication available to you. The information contained herein is not intended to be a comprehensive discussion of the strategies or concepts mentioned. Nor is any information or data discussed intended as tax, investment or legal advice. In pursuing any concept or idea presented, you should rely on your own due diligence and on your own attorneys, accountants and other professionals to determine if such ideas or concepts are appropriate for you. Although information herein has been obtained from sources believed to be reliable, Elder Lopez and www.palmasmls.com , and its local member do not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from its use. Elder Lopez and www.Palmasmls.com and its local member assumes no responsibility for any errors, omission or damages arising from use of information contained herein.