Puerto Rico’s property laws

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Puerto Rico's inheritance laws affect everyone who owns real estate in Puerto Rico. The main law regarding estate succession and real property rights is the Puerto Rico Civil Code. A foreign property owner is not treated differently, nor is any distinction made under Puerto Rico law between foreigners of different nationalities or religions.

The general principles governing jurisdiction over inherited property are:

* Real property located in Puerto Rico is regulated by the laws of Puerto Rico. If the foreign law states that the applicable law for real property located in Puerto Rico is the law of the jurisdiction where the owner resides, such disposition is not valid under Puerto Rico law. The Registry of the Property for Puerto Rico will not register a real property transfer ordered by a foreign court without going through Puerto Rico courts.

* Personal property (i.e., all property except real estate) is governed by the law of the jurisdiction where the deceased person resided or was domiciled. If the foreigner's national law states that the applicable law is Puerto Rico law, the judge must apply Puerto Rico substantive law. Puerto Rico courts recognize foreign judicial decisions and if an inheritance process was handled by a foreign competent judge, then the decision regarding property ownership must be executed by a Puerto Rico court.

Inheritance issues in Puerto Rico are handled by a civil court which applies formal written procedures. Any court decisions rendered in the deceased's last domicile outside Puerto Rico must pass through Puerto Rico courts for execution. This process can be long, even if there are no conflicting issues, and includes the request and issuance of an inheritance tax lien release issued by the Puerto Rico Treasury Department. All the property of the deceased located in Puerto Rico, real or personal, is subject to this tax lien created, by operation of law, immediately upon the person's death. The estate tax lien release lifts the lien and allows the transfer or conveyance of the encumbered property.

An inheritance procedure without conflicting interests between the heirs may last from twelve to eighteen months.

Puerto Rico levies estate and gift taxes on the net taxable value of the property transferred at death or by gift at rates ranging from 18% to 50%. Non-residents are subject to estate tax only on property located in Puerto Rico. The taxable estate is the gross estate value less debts of the decedent, funeral expenses, charitable bequests, and fixed exemption depending on citizenship status of the decedent:

* US$30,000 for a non-resident US citizen

* US$10,000 for a non-resident alien (non-US citizen)