Real Estate Transaction Costs in Puerto Rico: Government Stamps, Filing Fees, Transfer Tax, and Buyer-Seller Responsibilities

In our previous blog, we discussed the essential role of the notary attorney in Puerto Rican real estate transactions, detailing their responsibilities and typical fees. Now, we’re diving into another crucial aspect of the property buying process in Puerto Rico: understanding the various transaction costs that accompany a sale. These include government-mandated stamps, filing fees, and, in certain areas like Dorado, additional transfer taxes. Knowing these costs and how they’re divided between buyer and seller is vital for a smooth and transparent transaction.

Government Fees and Stamps in Puerto Rican Real Estate Transactions

The Puerto Rico Treasury Department requires specific stamps for public instruments like real estate deeds, prepared by a notary. Below are the primary types of stamps and their associated costs:

1. Internal Revenue Stamp

• Cost Calculation: Calculated as “base price + $1.00.”
• Example: For a $250,000 property, the Internal Revenue stamp would cost $251.00. The certified copy (for the buyer) costs half of this amount, or $125.50.

2. Notarial Tax

• Cost: A $1.00 stamp is required for both the original deed and the certified copy. This cost ensures compliance with notarial standards.

3. Legal Assistance Stamp

• Cost Calculation: A $5.00 stamp applies for transactions valued between $25,000.00 and $50,000.00. An additional $5.00 is added for each additional $50,000.00 (or fraction thereof).
• Example: For a $250,000 transaction, the Legal Assistance stamp costs $25.00. The certified copy, for the buyer, is half this amount, or $12.50.

Filing Fees in Puerto Rico Property Transactions

In addition to stamps, certain filing fees are required to register the transaction officially in the Puerto Rico Property Registry. This registration is essential as it publicly documents the transfer and ensures the property’s legal tract:

1. Electronic Filing Fee

• Cost: $10.00

2. Filing Fee

• Cost: $15.00

3. Political Code Fee

• Cost: $0.50

4. Registration Fee

• Cost Calculation: $50.00 for the first $25,000 of the transaction amount, plus $4.00 for every additional $1,000.
• Example: For a $250,000 property, the registration fee totals $950.00.

Additional Costs in a Puerto Rico Real Estate Transaction

Apart from government-required fees, a real estate transaction in Puerto Rico may involve other costs that buyers and sellers should anticipate:

• Real Estate Agent Commissions: Typically covered by the seller, though this may be negotiable.
• Appraisals: Necessary for determining the property’s value, especially when financing is involved.
• Bank Financing Costs: Includes origination fees, interest rates, and other loan-related expenses for buyers using bank financing.
• Title Studies: A title study is often conducted to ensure that the property has no outstanding liens or other encumbrances.
• Filing for Ownership Changes or Tax Exemptions: Additional fees may apply when filing for ownership change or for requesting property tax exemptions, particularly if the property is a primary residence.

Transfer Tax in Dorado for Property Sales Over $1,000,000

In Dorado, Puerto Rico, a special transfer tax applies to real estate transactions for properties valued at $1,000,000 or more. This tax, established under Municipal Ordinance #13 (January 2020), follows a tiered scale:

• $1,000,000 to $5,000,000: A 1% tax on the total transaction value.
• $5,000,000.01 to $10,000,000: 1% on the first $5,000,000 and an additional 0.75% on amounts above $5,000,000.
• $10,000,000.01 to $20,000,000: 1% on the first $5,000,000, 0.75% on amounts between $5,000,000.01 and $10,000,000, and 0.50% on amounts exceeding $10,000,000.
• $20,000,000.01 and above: 1% on the first $5,000,000, 0.75% on amounts from $5,000,000.01 to $10,000,000, 0.50% on amounts from $10,000,000.01 to $20,000,000, and 0.25% on amounts over $20,000,000.

This tax is the buyer’s responsibility, due at the time of transaction. Funds collected from this tax are allocated toward enhancing Dorado's quality of life, with investments in security, tourism, and emergency management.

How Transaction Costs Are Divided Between Buyer and Seller

Understanding who pays for these costs helps avoid misunderstandings during the property transfer process. The division of responsibilities is generally as follows:

Seller’s Responsibilities

• Original Deed Stamps: The seller is responsible for covering the cost of stamps on the original deed.
• Lien and Mortgage Release: If there are any existing liens or mortgages, the seller covers any stamps and filing fees required to release them and deliver a clear title to the buyer.
• Real Estate Agent Commissions: Usually paid by the seller, although this may vary depending on the agreement.

Buyer’s Responsibilities

• Certified Copy Stamps: The buyer covers the cost of stamps for the certified copy of the deed, including the Internal Revenue stamp, Notarial Tax, and Legal Assistance stamp.
• Filing Fees: All fees for filing and registering the property in the Property Registry fall to the buyer, including the electronic filing fee, filing fee, political code fee, and registration fee.
• Appraisal, Bank Financing, and Title Study Fees: If financing is involved, the buyer is typically responsible for these additional costs.

Planning for Transaction Costs

Proper planning for these costs is essential. For precise calculations, consider using the Puerto Rico Notarial Calculator, which estimates necessary stamps and filing fees based on the property’s value.

Conclusion

Understanding all costs and responsibilities in Puerto Rican real estate transactions is essential for a successful property transfer. By clarifying each party’s obligations, both buyers and sellers can navigate the transaction process smoothly, ensuring a transparent and well-organized experience.