Law 180-2025: An Important Change to Consider When Selling a Primary Residence in Puerto Rico

In December 2025, Law No. 180-2025 was enacted, amending Puerto Rico’s Incentives Code (Act 60-2019). This legislation introduces a capital gains tax exemption on the sale of a primary residence, provided that certain statutory requirements are met.

Although this is a tax-related change, its impact is felt directly in the Puerto Rico real estate market, particularly by homeowners who have seen their property values increase significantly over time and who are now asking how that appreciation translates into net proceeds at the time of sale.

In real estate, price and market conditions matter—but so does the legal and tax framework. When that framework changes, it is worth taking the time to understand the implications and evaluate possible scenarios carefully.

What does Law 180-2025 establish?

In general terms, Law 180-2025 provides that, starting with the tax year beginning after December 31, 2024, the capital gain generated from the sale of a property located in Puerto Rico may be exempt from income tax, as long as the property qualifies as the seller’s primary residence and all legal requirements are satisfied.

This law specifically amends Section 6060.05 of Puerto Rico’s Incentives Code.

What is capital gain?

Simply put, capital gain is the difference between the price at which a property is sold and the price at which it was originally acquired, after considering certain allowable costs.

Illustrative example:
If a residence was purchased for $300,000 and later sold for $1,000,000, the difference of $700,000 could be considered a capital gain.

Historically, that gain was generally subject to a 10% tax, which in this example would amount to approximately $70,000.
Under Law 180-2025, that amount may be fully exempt, provided the property qualifies as a primary residence and all statutory conditions are met.

In our experience, many homeowners are surprised when they clearly understand how much of the sale price actually remains in their hands once taxes and transaction costs are taken into account. This is why changes like Law 180-2025 often open new conversations, even among owners who were not actively planning to sell.

Requirements under Law 180-2025

The law establishes specific criteria for a property to qualify as a primary residence eligible for the exemption.

1. Occupancy as a primary residence

The property must have been occupied by the seller or the seller’s immediate family:

• For a minimum of two (2) years within the five (5) years preceding the sale, and

• Without being rented, whether short-term or long-term, during that period.

2. Inherited properties

In the case of inherited properties:

• The decedent must have occupied the property as a primary residence for the two (2) years prior to death, and

• The property must not have been rented after the decedent’s passing.

Who does this law apply to?

This capital gains exemption may apply to:

• Homeowners selling a property that qualifies as their primary residence, as defined by law.

• Sellers who meet the required occupancy and use conditions.

• Sales occurring in tax years beginning after December 31, 2024.

Who does this law NOT apply to?

Law 180-2025 expressly excludes:

• Beneficiaries of tax incentives under Section 2022.02 of the Incentives Code.

• Beneficiaries of Act 22-2012 (the Individual Investors Act).

• Properties that do not qualify as a primary residence.

• Properties that were rented during the relevant qualification period.

Where can you read the law?

👉 Official text of Law No. 180-2025 (PDF):
https://aldia.microjuris.com/wp-content/uploads/2025/12/Ley-180-2025.pdf

A reflection from our real estate practice

In real estate, details matter.
A property’s history, how it has been used over time, and the timing of a sale can make a meaningful difference in the final outcome.

Changes to the tax framework, such as Law 180-2025, often reshape how homeowners evaluate a potential sale. In many cases, understanding this new context allows owners to more clearly assess timing, structure, and net financial results, even when a sale is not imminent.

If you are a homeowner and would like to understand how this new tax framework could influence a potential sale, learn the current market value of your property, or simply discuss possible scenarios, we are available for a confidential conversation from a Puerto Rico real estate perspective.

Many of the best decisions begin with a timely conversation.

Important note

This article is for informational purposes only and does not constitute legal or tax advice. We recommend consulting with a licensed tax professional to evaluate individual circumstances.