2023 Laws of Puerto Rico › TITLE TWENTY-ONE - Municipalities (§§ 1-4 — 6756) › Subtitle 7 - Municipal Property Tax (§§ 5001 — 6756) › PART I (§§ 5001 — 5252) › Chapter 247 - Exemptions From Property Taxes (§§ 5151 — 5200) › § 5151 - Property exempt from taxation

The following assets shall be exempted from the payment of all personal and real property taxes:
(a) House[hold] personal property, such as furniture; jewelry; coin, stamp and art work collections, etc., and others of a similar nature; securities; furniture of a second home; vessels, and any other article strictly for personal use.
(b) The property of the United States and all property exempted from the payment of taxes by the laws of the United States; the property of the Commonwealth of Puerto Rico, of the Puerto Rico Housing and Human Development Trust and of the Puerto Rico Conservation Trust, with the exception of what is determined in § 5066 of this title; the property of any municipality exclusively set aside for public use, even though said property is a source of revenue for the municipality to which it belongs. In those cases whereby the Commonwealth Government has conveyed or later conveys lands or property belonging to it in usufruct to private persons or entities, said lands or property thus conveyed shall be subject to the property tax laws and the usufructuaries shall be bound to pay such taxes. In the event said usufructs are for a term of more than five (5) years, or for life, the usufructuaries shall be deemed to be the owners of the property for all effects of the tax exemption laws and ordinances.
(c) The debts of any person, partnership or corporation subject to the payment of taxes, with the limitations and in the manner prescribed in §§ 5066 and 5067 of this title.
(d) The shares, bonds, interest, bills, promissory notes, and other securities or debt or obligation instruments issued by institutions, corporations, societies, or companies organized under the laws of Puerto Rico; and the shares, bonds, interest, bills, promissory notes, and other securities or debt or obligation instruments issued by foreign corporations, societies, or companies owned by natural persons, investment companies registered and organized under the laws of Puerto Rico, or by corporations or societies organized under the laws of Puerto Rico.
(e) The real and personal property belonging to and registered in the name of any nonprofit corporation, institution, association, or entity organized under the laws of Puerto Rico, and devoted to religious, charitable, scientific, literary, educational, and recreational purposes, among others, as well as commercial leagues, chambers of commerce, civic leagues or organizations, boards of proprietors, tenant associations, employee associations, and any other nonprofit organization in general, whose net earnings and profits do not benefit any shareholder or person in particular. The personal and real property used as parochial homes in which preachers, ministers, or priests live shall be exempt, as well as those used, in whole or in part, as Masonic and Oddfellow lodges, or as theosophic or psychic study centers or charitable centers.
However, in the event that a part of the property is not occupied by the organization or institution for its nonprofit purposes and ends, or that part of the property is leased and making a profit, the part of the property thus used shall be subject to taxation in the manner, within the term, and upon meeting the requirements provided by law. It shall be the responsibility of the nonprofit organized corporation, institution, association, or entity to prove that part of the property is not occupied by the organization or institution for its nonprofit purposes and ends, or that part of the property is not leased and making a profit, through a certificate issued by an authorized professional, in accordance with the provisions of §§ 711 et seq. of Title 20, known as the “Board of Examiners of Engineers, Architects, Surveyors, and Landscape Architects of Puerto Rico Act”.
(f) The property of every hospital, clinic, or polyclinic belonging to a religious institution, organization, association, foundation, or any other type of institution organized and engaged in the performance of medical-hospital activities for nonprofit purposes, including land, buildings, garages, annexes, housing for resident physicians, nurses and nursing students, in existence or to be built in the future as an integral and indispensable part of the physical facilities of said hospitals, clinics or polyclinics; also including all the equipment and personal property used in the operation and conduct of the medical-hospital activities thereof. The tax exemption granted under this subsection is contingent on strict compliance with the provisions of §§ 373 and 373a of Title 13, known as the “Hospital Facilities Tax Exemption Act”.
The right to the tax exemption granted in this subsection shall be exercised solely upon filing a Certificate of Compliance issued by the Secretary of the Treasury, as provided in §§ 371 et seq. of Title 13. Likewise, it shall be an essential requirement to enjoy the benefits of this part that every institution remits any withholding tax in a timely manner, as provided in the Internal Revenue Code of Puerto Rico. In the event that any part of the personal or the real property is not used or occupied for its nonprofit ends and purposes, the hospital, clinic, or polyclinic belonging to a religious institution, organization, association, foundation, or any other type of nonprofit institution organized and engaged in medical-hospital activities, or that part of the personal or real property is leased or making a profit, the part of said property not used or occupied for its nonprofit purposes or that is leased shall be subject to taxation in the manner, within the term, and upon meeting the requirements provided by law. It shall be the responsibility of the hospital, clinic, or polyclinic belonging to a religious institution, organization, association, foundation, or any other type of institution organized and engaged in medical-hospital activities to prove that part of the property is not occupied by the organization or institution for its nonprofit purposes and ends, or that part of the property is not leased and making a profit, through a certification issued by an authorized professional in accordance with the provisions of §§ 711 et seq. of Title 20, known as the “Board of Examiners of Engineers, Architects, Surveyor, and Landscape Architects of Puerto Rico Act”.
(g) Real and personal property belonging to every nonprofit association organized under the laws of Puerto Rico for the purpose of selling prepaid programs or plans for medical and hospital services; provided, that it meets the requirements of Act No. 142 of May 9, 1942, as amended, and for which a valid Certificate of Compliance issued by the Insurance Commissioner of Puerto Rico has been filed. In the event that a part of the property is not occupied by the association for its nonprofit ends and purposes, or that part of the property is leased and making a profit, the part of the property thus used shall be subject to taxation in the manner, within the term, and upon meeting the requirements provided by law. It shall be the responsibility of the nonprofit partnership to prove that part of the property is not occupied by the association for its nonprofit purposes and ends, or that part of the property is not leased and making a profit, through a certification issued by an authorized professional in accordance with the provisions of §§ 711 et seq. of Title 20, known as the “Board of Examiners of Engineers, Architects, Surveyor, and Landscape Architects of Puerto Rico Act”.
(h) Cemeteries, tombs and the right to burial at a specific location, provided these places are destined for the burial of bodies and no dividends or profit are obtained from them, except in the case of dividends or profits derived from cemeteries owned by the municipalities.
(i) Vessels of all types not used in any industry or business, except for commercial fishing or leasing for recreational purposes, which are duly registered with the Office of the Navigation Commissioner of the Department of Natural and Environmental Resources. Also exempt shall be the fish in the possession of the fishermen who caught them, vessels of all types which constitute the working tools of the fishermen and the fishing vessels exclusively devoted to fishing as part of any industrial units, or any entity engaged in fishing and in the exclusive transportation of fish for industrial processing in Puerto Rico, or to any of these.
(j) Fruit to be harvested and land products that are precisely the property of the producer and while they are in his/her possession; cattle and silos used exclusively to ferment fodder for raising cattle; poultry and the equipment and structures specifically constructed for poultry production; pigs and the equipment and structures specifically constructed for raising pigs, and thoroughbred horses raised for breeding, race horses, equipment and structures built and the land developed specifically for breeding thoroughbred race horses. “Thoroughbred horses” raised for breeding shall be understood to mean those registered in the Puerto Rico Race Horse Stud Book kept by the Horse Racing Administration pursuant to the regulations in effect.
(k) Private property of artisan workshops when they are directly operated by the artisan in the practice of his craft even though they may be available to more than one artisan. The artisan shall file a valid Certificate of Compliance issued by the Institute of Puerto Rican Culture solely for the exemption provided herein.
(l) Every license, authorization, diploma or certificate granted by virtue of the law to natural persons for them to exercise a profession, occupation or craft. Texts and professional books and private libraries shall also be exempt.
(m) Non-interest bearing mortgage bonds, and other obligations used exclusively as bonds or guaranties of the faithful performance of public office.
(n) Motor vehicles subject to payment of license plate and sticker fees provided by §§ 5001 et seq. of Title 9, known as the “Vehicle and Traffic Act of Puerto Rico of 2000”, except those kept in stock by natural or juridical persons who are motor vehicle dealers.
(o) Raw sugar and the syrup produced from sugar cane in Puerto Rico as long as they are in the possession of the producer, and refined sugar in the possession of the refiner.
(p) Real and personal property owned in fee simple by the government of a foreign country to be used completely or exclusively for the official use of a consulate in Puerto Rico, and while said property is used for such a purpose, provided that the respective countries grant a similar exemption to properties belonging to the United States of America devoted to a similar use within their territory. The diplomatic or consular representatives requesting such an exemption must cite before the Department of State the legal provision, or stipulation by treaty or agreement, which establishes such a privilege in the country represented by them; and they must, likewise, notify the Department of State of Puerto Rico at an opportunely as to when the government of their nation sells, transfers, donates or in any other way conveys said property in Puerto Rico.
(q) Machinery and equipment used in Puerto Rico for:
(1) Research about and/or for minerals or oil by natural or juridical persons who perform such studies with the approval of the Puerto Rico Mining Commissions. This exemption shall be in effect regardless of whether said machinery and equipment is not being used for any reason.
(2) The conversion of coal into a source of energy. This exemption shall be granted for the five (5) years immediately following the acquisition or installation of the equipment. [The equipment acquired prior to the date of approval of this act will be governed by the applicable legal provisions and will be in effect until the date of approval of this act.]
(3) The control, reduction, or prevention of environmental pollution caused by a cement production plant having a Certificate of Compliance issued by the Environmental Quality Board to such effect.
(r) Reserved.
(s) Any solar-powered material, equipment or accessory and renewable energy collection, storage, generation, distribution, and application equipment introduced to or manufactured in Puerto Rico, as such equipment is defined in §§ 416 and 417 of Title 12.
Likewise, solar power generation equipment, including accessories and parts as long as they are necessary to achieve said purpose. In order to qualify for this exemption, the distributor or manufacturer shall file a valid Certificate of Compliance issued by the Commonwealth Energy Public Policy Office stating that the solar power equipment, or the accessories and parts thereof meet the standards and specifications established by the aforementioned Office, and that they have a five (5)-year warranty or longer.
(t) Real and personal property belonging to an international banking institution to which a license has been issued under §§ 232 et seq. of Title 7.
(u) Properties built or under construction as of the effective date of this act, and which are devoted to the rental housing market pursuant to the following rules:
(1) The tax exemption shall not exceed fifteen thousand dollars ($15,000) (one hundred and fifty thousand dollars ($150,000) for fiscal years 2009-10, 2010-2011, and 2011-2012) of the appraised value per housing unit, pursuant to the criteria for the classification and appraisal of property for tax purposes as provided in §§ 5051–5096 of this title;
(2) the lessor shall not own property, directly or indirectly, for residential purposes;
(3) the exemption shall be granted for a period of twenty (20) years while the property is maintained in the housing rental market under Plan II of §§ 515 or 521 of the Federal Farmer’s Home Administration and operates on the basis of limited profits, and
(4) the Secretary of Housing of the Commonwealth shall issue a Certificate of Compliance certifying it as affordable housing under the Section 515 or 521 Program of the Farmer’s Home Administration once he receives documentation to that effect from that federal agency. The tax exemption provided herein shall only be granted if the appropriate and valid Certificate of Compliance is filed.
(v) Every authorization and/or license granted by the Public Service Commission to a natural person as a public carrier, provided said person is the one using the license and/or the authorization thus granted, and that the same is his/her working tool. A natural person shall not be allowed to enjoy more than one exemption under this subsection.
(w) Intangible personal property including good will, privilege rights, trademarks, grants, franchises, value of contracts, timeshare or vacation club rights created pursuant to the provisions of §§ 1251 et seq. of Title 31, patents, inventions, formulas, processes, designs, patterns, special technical know-how, methods, programs, systems, procedures, campaigns, surveys, studies, forecasts, estimates, client listings, technical information and any other of a like or similar nature. In the particular case of timeshares or vacation clubs created according to the provisions of §§ 1251 et seq. of Title 31, the tax exemption provided herein shall only be granted upon the filing of a valid Certificate of Compliance issued by the Executive Director of the Puerto Rico Tourism Company.
(x) Real property located in historic zones declared as such by the Puerto Rico Planning Board or by the Institute of Puerto Rican Culture pursuant to legislation in effect. The tax exemption provided herein shall only be granted upon the filing of a valid Certificate of Compliance issued by the corresponding agency, as the case may be.
(y) Real properties on which newly-constructed multi-level structures are built which are directly devoted to the parking business in the zones of each municipality determined by the municipality in the case of an autonomous municipality with due competence, or by the Puerto Rico Planning Board through the promulgation of regulations. The term of the exemption shall be determined by each municipal legislature, through the approval of an ordinance to such effect. Said term shall never be less than five (5) years nor more than twenty (20) years.
(z) The inventory maintained by those juridical persons, including corporations dedicated to the operation of voluntary goods and services retailers’ chains programs organized in accordance with the provisions of §§ 257 et seq. of Title 10, and duly certified by the Commercial Development Administration, to be transferred to their associates. These entities shall not establish more than four (4) distribution warehouses in Puerto Rico; Provided, That the inventory refers to that of merchandise for resale by their associates.
(aa) The real or personal property located within manufacturing plants engaged in tuna processing when there are two hundred (200) or more employees in their operations. For the purposes of this subsection, a “manufacturing plant” shall be understood to be one or more buildings and/or structures with the appropriate equipment and/or machinery installed in said facility to be used jointly in industrial operations for the production of goods for trade, products or groups of products related thereto.
(bb) Personal property, including inventories and equipment of those businesses who keep operating within a duly credited Foreign Trade Zone or Sub-zone in Puerto Rico pursuant to the Foreign Trade Zone Act of 1934, as amended (19 U.S.C. 81C(a)).
(cc) Sixty percent (60%) of the appraisal value of all real property, whether privately owned, located within a duly credited Foreign Trade Zone or Sub-zone in Puerto Rico pursuant to the Foreign Trade Zone Act of 1934, as amended (19 U.S.C. 81C(a)).
(dd) The property of the Puerto Rico Science, Technology and Research Trust established through public deed granted by the Secretary of Economic Development and Commerce and the President of the University of Puerto Rico as trustors.
(ee) Newly-built real properties for residential purposes shall be exempt from the payment of the taxes imposed under §§ 5001 and 5002 of this title until the sale is completed and the housing unit is issued the corresponding use permit. The sale process shall be deemed to be completed once the developer transfers the ownership of the housing unit to the first Buyer, through the execution of the corresponding sale, segregation, and subdivision deed.
Before the sale is completed, only the owner of the main lot in its original state shall be required to pay taxes, prior to the subdivision and segregation of the lot.
In the case of a newly built housing unit used for leasing purposes, the payment of the tax shall be required once the individual use permit for the unit to be leased is issued.
(ff) Real and personal property belonging to creative industries, that are used for such purposes, and registered pursuant to the provisions of the Puerto Rico Creative Industries Promotion Act, §§ 11261 et seq. of Title 21, in cases where the municipality chooses to issue an ordinance authorizing such exemptions, whether in whole or in part, and in the most convenient manner so as to promote the establishment and development of such industries.
Any action taken by the Executive Director of the Municipal Revenues Collection Center (CRIM, Spanish acronym), or any other official concerned, in connection with the qualification process for the award of any benefits under this section shall be limited to the granting of the benefit in question, upon the issuance of a valid Certificate of Compliance in question. The valid Certificate of Compliance shall be available in the Interagency Validation Portal for the Granting of Incentives for the Economic Development of Puerto Rico. Any person interested in availing himself of the benefits provided herein shall be responsible for applying for the Certificate of Compliance with the agencies, public corporations, and/or municipalities concerned with said Certificate and to ensure that the same is available in the Portal. The filing of the Certificate of Compliance by the interested person shall be an essential requirement for the Municipal Revenues Collection Center (CRIM) or any other official concerned with any of the benefits granted by virtue of this section to grant the benefit or incentive provided for in this part. The agency or entity concerned with the issuance of the Certificate of Compliance shall be responsible, first and foremost, for overseeing eligibility under any and all provisions of this part. However, if the Executive Director of the Municipal Revenues Collection Center (CRIM) believes that additional information is required to validate the data on the Certificate of Compliance he may request the applicant to supply such information. The Executive Director shall not be required to validate or grant the tax incentive or benefit requested if, in his judgment, the information has not been supplied.
History —Aug. 30, 1991, No. 83, § 5.01; Sept. 6, 1996, No. 196, § 1; Aug. 14, 1997, No. 83, § 1; Dec. 19, 1997, No. 170, § 1; July 17, 1998, No. 128, § 3; Dec. 21, 1999, No. 347, § 1; June 17, 2000, No. 103, § 1; Nov. 7, 2001, No. 153, § 1; June 24, 2004, No. 159, § 1; Aug. 18, 2004, No. 214, § 14; Oct. 3, 2006, No. 222, § 1; Aug. 10, 2008, No. 248, § 3; Mar. 9, 2009, No. 7, § 63; July 10, 2009, No. 37, § 33; Sept. 27, 2011, No. 198, § 1; Dec. 26, 2013, No. 168, § 1; Oct. 13, 2014, No. 173, § 15; Nov. 17, 2015, No. 187, § 45.