2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 15 - Puerto Rico Industrial Incentives Generally (§§ 10001 — 10855) › PART III - Other Tax Incentives (§§ 10401 — 10855) › Chapter 951 - Tax Credits for Investment in Housing Infrastructure (§§ 10601 — 10612) › § 10602 - Credit for investment in infrastructure

(a) General rule.— Subject to the provisions of this chapter, every petitioner may qualify for a credit for investment in housing infrastructure or infrastructure of regional or municipal impact by the investment made in the construction of infrastructure.
For purposes of computing the credit provided under this chapter, only the special investment in housing infrastructure or infrastructure of regional or municipal impact approved by the designated officials of the Department of Housing and the Department of the Treasury shall be taken into consideration, once the merits of the application for credit for investment in housing infrastructure or in infrastructure of regional or municipal impact (pre-application conference) are analyzed.
The Secretary of Housing, after consultation with the Secretary of the Treasury, shall have the discretion, when warranted by the best interests of the Commonwealth of Puerto Rico, to grant the credits provided in this chapter with regard to special investments in infrastructure in developments begun between the first of January of 2001, and the date on which the regulations referred to in § 10605 of this title become effective. The Secretary of Housing, after consultation with the Secretary of the Treasury, shall have the discretion, when warranted by the best interests of the Commonwealth of Puerto Rico, to grant the credits provided in this chapter with regard to special investments in infrastructure of regional or municipal impact until the date o [sic] which the regulations referred to in § 10605 of this title, pertaining to infrastructures of regional impact, become effective.
(1) A tax credit shall be granted to a combine upon the approval of the agency and of the Secretary of Housing in an amount equal to one hundred percent (100%) of the investment made, for the design, development and construction of the infrastructure of regional or municipal impact to be transferred to the Commonwealth of Puerto Rico.
(b) Computation of credit.— The credit to be granted to the petitioner shall be made up of two parts:
(1) A credit for the extraordinary investment in infrastructure required by any agency that will benefit housing projects and other projects that do not belong to the petitioner, or in which the petitioner, its stockholders, partners, or persons holding an interest thereon, do not hold a major proprietary interest, and
(2) a credit resulting from the extraordinary investment in infrastructure that benefits the petitioner’s housing project.
Before computing said credit, the Secretary of Housing must determine:
(1) The total cost of the infrastructure project;
(2) the total capacity of the infrastructure project;
(3) the amount of the total capacity that shall be used or that will benefit projects or housing developments that do not belong to the petitioner;
(4) the amount of the total capacity that shall be used or that will benefit projects that are not housing projects;
(5) the amount of the capacity that is foreseen will not be used for any purpose (to wit: excessive capacity);
(6) the amount of total capacity that shall be used or that will benefit the petitioner’s housing project;
(7) the proportion (stated as a fraction of the total cost) of the housing project that shall be devoted to low cost housing;
(8) the proportion (stated as a fraction of the total cost) of the housing project that shall be devoted to middle class housing, and
(9) the proportion (stated as a fraction of the total cost) of the housing project that shall be devoted to other purposes (to wit, dwellings that do not qualify as low cost housing or middle class housing, or structures for commercial or tourist purposes).
The amount of credit for the extraordinary investment in infrastructure that benefits housing projects and other projects that do not belong to the petitioner (or in those projects in which the petitioner, his stockholders or partners do not hold a majority proprietary interest), shall be one hundred percent (100%) of the proportional cost of that portion of the infrastructure project that will benefit housing projects and other projects that do not belong to the petitioner. Stated mathematically, this amount of credit is equal to the amount under subsection (b)(1) of the second paragraph multiplied by a fraction whose numerator is the amount under subsection (b)(3) added to the amount under subsection (b)(4) and the denominator is the amount under subsection (b)(2) of the second paragraph.
The amount of the credit for the extraordinary investment in infrastructure that benefits the housing project of the petitioner, shall be equal to seventy-five percent (75%) of the proportional cost of that portion of the infrastructure that benefits low-cost housing, plus fifty percent (50%) of the cost of that portion of the infrastructure that benefits middle class housing. Stated mathematically, said amount of credit is equal to (I) the amount under subsection (b)(1) of the second paragraph multiplied by two fractions, the first of which has as its numerator the amount under subsection (b)(6) and has as its denominator the amount under subsection (b)(2) of the second paragraph, and the second of which is equal to ninety percent (90%) of the fraction determined under subsection (b)(7), plus (II) the amount under subsection (b)(1) of the second paragraph multiplied by two fractions, the first of which has as its numerator the amount under subsection (b)(6), and has as its denominator the amount under subsection (b)(2), and the second of which is equal to fifty percent (50%) of the fraction determined under subsection (b)(8).
(1) A combine previously approved by the agency and the Secretary of Housing shall be entitled to receive a tax credit equal to one hundred percent (100%) of the total investment (direct and indirect costs) incurred to make and complete the design, development and construction of the infrastructure of regional impact.
(c) Other credits; reduction.— The total of the credit for extraordinary investment in housing infrastructure to be granted under clauses (1) and (2) of subsection (b) of the first paragraph, shall be reduced by:
(1) The total amount of credits or tax benefits granted to a petitioner pursuant to other laws or regulations that can be used against the fees for connection to the aqueduct and sewer system of the Aqueduct and Sewer Authority, or any other tax levied for impact or other similar [changes] required by the municipalities and concerned agencies, and
(2) the amount of tax credits or benefits granted by any municipality or commonwealth or federal agency or instrumentality that base their concession on the investment made in the infrastructure of the proposed housing project.
(d) Availability of credit; term to construct infrastructure.—
(1) The credit provided in subsection (a) of this section shall be available after the infrastructure works for which credit shall be granted is completed, and the other requirements imposed by this chapter have been met.
(2) The credit provided in subsection (b) of this section shall be available after the infrastructure works and the housing project that the infrastructure serves are completed, and the other requirements imposed by this chapter are met.
(3) The credit provided under this chapter shall be available once the Extraordinary Investment in Infrastructure is certified by the Secretary of Housing, and the Secretary of the Treasury certifies the availability of the credits as provided in § 10603 of this title. The Secretary of Housing may require the petitioner [to] present all the documents and information he/she deems are needed to certify the investment in infrastructure of the housing project and the termination thereof, or of the housing project, including but not limited to use permits, sworn statements and construction certificates and other similar documents.
(4) The infrastructure works shall be completed within a maximum term of three (3) years, figured from the date the Secretary of Housing issues the corresponding certificate of approval. The Secretary of Housing may at his/her discretion, modify or extend the term provided in this subsection when the interests of the Commonwealth of Puerto Rico merit it. The Secretary of Housing may again collect the handling fee or charge provided in § 10605 of this title, for any petition for the extension of the term provided above.
(5) The tax credit for investment in infrastructure of regional impact shall be available upon completion and transfer of the infrastructure of regional impact to the Commonwealth of Puerto Rico.
However, in the discretion of the Secretary of Housing, when he/she deems it to be in the best interests of the Commonwealth of Puerto Rico, a partial tax credit shall be granted for the sum of the necessary costs incurred in the finished works, if the infrastructure of regional impact was developed in stages and it is so certified and evidenced to the Secretary of Housing, the Secretary of the Treasury, and the agency, in which case, a bond for the total amount of the partial tax credit shall be required. Notwithstanding, in the discretion of the Secretary of Housing, when he/she deems it to be in the best interests of the Commonwealth of Puerto Rico, one hundred percent (100%) of the tax credit shall be available to the combine once it obtains the total financing needed, and the same becomes available, to complete the construction of the housing infrastructure of regional impact, and it is so evidenced to the satisfaction of the agency, the Secretary of Housing, and the Secretary of Treasury, only when a bond equal to one hundred percent (100%) of the total amount of credit is posted, which shall be in effect until the construction of the housing infrastructure of regional impact is completed, provided that the same serves to guarantee compliance, in the discretion of the Secretary of Housing, the agency, and the Secretary of the Treasury.
(e) Credit carryover.— Any credit that is not used in a given tax year may be carried over to subsequent tax years until it is completely used up.
(f) Assignment of credit.—
(1) The credit provided under this chapter may be assigned, sold or otherwise transferred in whole or in part by the petitioner. Once it is thus transferred, the credit may not be assigned or otherwise transferred. For purposes of this subsection, a change of control of the petitioner shall not constitute a transfer of the credit provided under this chapter, nor the transfer of the tax credit from a combine to its members, or from the latter to their legatees or heirs.
(2) The petitioner who has ceded or transferred all or part of his/her credit, as well as the acquirer of the credit, shall notify the Secretary of the Treasury of the cession or transfer through a sworn statement to such effect which shall be included with the income tax statement for the year in which the cession or transfer or credit is made. The sworn statement shall contain the information that the Secretary of the Treasury establishes through regulations promulgated to such effect.
(3) The money or worth of the property received in exchange for the credit shall be exempted from taxes under the Puerto Rico Internal Revenue Code of 1994, up to an amount equal to the amount of the credit ceded or transferred. The worth of any property received by the petitioner in exchange for the credit shall be determined in the manner established by the Secretary of Housing, in conjunction with the Secretary of the Treasury, which shall include an appraisal performed by a duly licensed appraiser.
(g) Error in the computation of credit.— If by error, the Department of Housing grants a petitioner a credit that is greater than what corresponds to him/her according to the extraordinary investment in Infrastructure made, the excess shall be owed by the developer as an income tax, including any applicable interest, surcharges and penalties, from the date the said credit was used. The Secretary of Housing shall notify the excess credit to the Department of the Treasury.
(h) Deduction.— For purposes of the deductions from the gross income under § 8423 of this title, the cost of the extraordinary infrastructure for which credits shall be obtained under this chapter, shall be reduced by the amount of the credits granted to the petitioner under this chapter. In computing the amount of investment that qualifies for the credit granted under this chapter, the deductions that the petitioner has taken in his/her income tax returns shall not be subtracted for the period prior to the granting of the credits, corresponding to the interest paid for the borrowed money used for the infrastructure works.
History —Aug. 10, 2001, No. 98, § 4; Aug. 6, 2008, No. 171, § 2.