2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART II - Income Taxes (§§ 30041 — 30622) › Chapter 1005 - Computation of Taxable Income (§§ 30101 — 30157) › Subchapter C - Deductions (§§ 30121 — 30140) › § 30135 - Deductions applicable to taxpayers who are individuals

(a) For purposes of this section, the taxpayer may claim the following items as deduction:
(1) Deduction for interest paid or accrued on residential property.—
(A) In general.— In the case of individuals, interest paid shall be allowed as a deduction, including interest paid by a tenant-stockholder of a cooperative housing association allowable as a deduction under clause (2), paid or accrued during the taxable year on debts incurred on account of secured loans for the acquisition, construction or improvements, or refinancing of a property when said loans are totally secured with a mortgage on a property, which at the time such interest is paid or accrued, is a qualified residence of the taxpayer.
(B) Special rule.— There shall be allowed as a deduction under this subsection the interest paid or accrued during a taxable year on debts on account of personal loans made for the acquisition, construction, or improvement of a housing unit that is a qualified residence, when such property is not admitted by a financial institution to secure the loan.
(C) Limitation:
(i) There shall be allowed as a deduction under paragraphs (A) and (B), the total amount of the interest paid up to a maximum of $35,000; provided, that said amount does not exceed the greater of:
(I) Thirty percent (30%) of the adjusted gross income of the taxpayer, as modified pursuant to subparagraph (iii) of the taxable year for which the deduction is claimed; or
(II) Thirty percent (30%) of the adjusted gross income of the taxpayer, as modified pursuant to subparagraph (iii) for any of the three (3) taxable years preceding the year in which the deduction is claimed.
(ii) For purposes of this paragraph, “adjusted gross income” of the taxpayer, as defined in § 30103 of this title, shall be increased by the gross income exclusions described in § 30101(b) of this title, payment to support children described in § 30112(a)(3) of this title, and exempt income items described in § 30102 of this title.
(iii) The limitation in this paragraph shall not apply when the taxpayer (or, in the case of a married individual filing a joint return, the taxpayer or his/her spouse) has reached the age of sixty-five (65) at the close of the taxable year.
(D) Definition of qualified residence.— For purposes of this paragraph, the term “qualified residence” means:
(i) The principal residence of the taxpayer, within the meaning of § 30144(m) of this title except that, for purposes of this paragraph, said residence may be located within or outside of Puerto Rico, and
(ii) other residence of the taxpayer which is selected by the taxpayer, for purposes of this subsection for the taxable year, which is located in Puerto Rico and is used by the taxpayer, any member of his/her family or any other person having any interest in said property, as a residence during the taxable year for a number of days which exceeds the greater of:
(I) Fourteen (14) days, or
(II) ten percent (10%) of the number of days during such taxable year for which such unit had been rented at the fair market rental value of the property. If during the rental period the property is used by the lessor as his/her principal residence, it shall not be considered that the taxpayer has used it as other residence.
(E) Married individuals filing separate returns.— In the case of a married individuals living together at the end of their taxable year and filing separate returns for the taxable year:
(i) Shall be treated as one taxpayer for purposes of paragraph (D), and
(ii) each individual shall be entitled to take into account one residence unless both individuals consent in writing to one individual taking into account the principal residence and the other residence.
(2) Amounts representing interest paid to cooperative housing association.—
(A) Allowance of deduction.— In the case of a tenant-stockholder (as defined in paragraph (B)(ii)), there shall be allowed as a deduction amounts (not otherwise deductible) paid or accrued to a cooperative housing association within the taxable year, but only to the extent that such amounts represent the tenant-stockholder’s proportionate share of:
(i) The interest allowable as a deduction to the association under § 30123 of this title, which is paid or incurred by the association on its indebtedness incurred in the acquisition, construction, alteration, rehabilitation, or maintenance of housing or apartment building, or in the acquisition of the land on which the housing or apartment building are situated.
(ii) Limitation.— There shall be allowed as a deduction under subparagraph (i) the total amount of the interest attributable to the tenant-stockholder; provided, that said amount does not exceed the greater of:
(I) Thirty percent (30%) of the adjusted gross income of the taxpayer, as modified pursuant to subparagraph (iii), of the taxable year for which the deduction is claimed, or
(II) thirty percent (30%) of the adjusted gross income of the taxpayer, as modified pursuant to subparagraph (iii), for any of the three (3) preceding taxable years for which the deduction is claimed.
(iii) For purposes of subparagraph (ii), adjusted gross income of the taxpayer, as defined in § 30103 of this title, shall increase by the gross income exclusions described in § 30101(b) of this title, payment to support children described in § 30112(a)(3) of this title and exempt income items described in § 30102 of this title.
(iv) The limitation in subparagraph (ii) shall not apply when the taxpayer (or, in the case of a married individual who is not filing a [separate] return, the taxpayer or his/her spouse) has reached the age of sixty-five (65) at the close of the taxable year.
(B) Definitions.— For purposes of this paragraph
(i) The term “cooperative housing association” means a corporation.
(I) Having one class of outstanding stock,
(II) each of the stockholders of which is entitled, solely by reason of his/her ownership of stock in the corporation, to occupy for dwelling purposes a house, or an apartment in a building, owned or leased by such corporation,
(III) no stockholder of which is entitled, either conditionally or unconditionally, to receive any distribution not out of earnings and profits of the corporation except on a complete or partial liquidation of the corporation, and
(IV) eighty percent (80%) or more of the corporation’s gross income for such taxable year in which the interest described in paragraph (A) are paid or incurred is derived from tenant-stockholders.
(ii) Tenant-stockholder.— The term “tenant-stockholder” means an individual who is a stockholder in a cooperative housing association, and whose stock is fully paid-up in an amount not less than an amount shown to the satisfaction of the Secretary or his/her delegate as bearing a reasonable relationship to the portion of the value of the association’s equity in the housing or apartment building and the land on which situated is attributable to the housing or apartment which such person is entitled to occupy.
(iii) The term “tenant-stockholder’s proportionate share” means that proportion which the stock of the cooperative housing association owned by the tenant-stockholder is of the total outstanding stock of the corporation, including any stock held by the corporation.
(3) Charitable contributions and other gifts.—
(A) General rule.— In the case of an individual, there shall be allowed as a deduction, the amount of charitable contributions or gifts made during the taxable year to, or for use by, nonprofit organizations or entities described in this paragraph, subject to the limitations established in paragraph (B).
(B) Limitation.— The deduction allowed under this clause shall be subject to the following limitations:
(i) In the case of contributions or gifts to:
(I) The Government of Puerto Rico, the United States, any state, territory, or political subdivision thereof or the District of Columbia, or any possession of the United States, for exclusively public purposes.
(II) Entities described in § 30471(a)(1) of this title.
(III) Nonprofit entities described in § 30471(a)(2) of this title duly qualified by the Secretary or the United States Internal Revenue Service (other than gifts described in subparagraph (ii)).
(IV) Entities described in paragraph (C), there shall be allowed as a deduction equal to the amount contributed, the deduction of which shall not exceed fifty percent (50%) of the adjusted gross income of the taxpayer for the taxable year. The Secretary shall promulgate through regulations, administrative order, circular letter or any other information bulletin a list of nonprofit entities qualified to receive such contributions.
(ii) In the case of:
(I) Donations of conservation easements to agencies of the Government of Puerto Rico or nonprofit organizations, subject to the requirements established in the Conservation Easement Act, or
(II) donations to private or public museological institutions consisting of works of art duly appraised or any other objects of acknowledged museological value, if the fair market value of the donated property exceeds its adjusted basis of the donor (as determined in § 30142 of this title) for over twenty-five percent (25%), the fair market value of the contributed property up to thirty percent (30%) of the adjusted gross income of the taxpayer for the taxable year shall be allowed as deduction.
(III) Exception.— If the museological institution to which the donation consisting of a work of art is made is a museum duly accredited by the American Association of Museums, and is located in Puerto Rico, the deduction provided in this paragraph shall be the fair market value of the work of art donated (including in the case of works of art donated by the artist who created them), up to a maximum of fifty percent (50%) of the adjusted gross income of the donor for the taxable year, without being subject to the limitation provided in subparagraph (iii) of this paragraph. Any excess not claimed as a deduction in the year the donation was made may be carried forward to the next five (5) taxable years, subject to the limit of the deduction herein provided.
(iii) In the case of donations made to private museological institutions, described in subparagraph (ii):
(I) They have to be conditioned so as to prohibit any type of future negotiation with the donated work or object and that in the case of the dissolution of the private museological institution in question, ownership of the donated work of art or object of museological value shall pass to the Government of Puerto Rico and become part of the National Collection of the Institute of Puerto Rican Culture.
(II) To those ends, the Institute of Puerto Rican Culture shall adopt the necessary regulations to identify the work in question in an official registry and guarantee the future transfer of ownership if necessary.
(III) The Secretary of the Treasury shall establish, in coordination with the Institute of Puerto Rican Culture, the regulations necessary for, among other things, guarantee the museological nature and the proper monetary appraisal of the donated works of art and other objects, as well as to determine any other conditions deemed pertinent.
(iv) Unlimited deduction for charitable contributions and other gifts.— If in the taxable year and in each one of the ten (10) preceding taxable years, the amount of contributions or gifts made to those donees described in subparagraph (i), or in corresponding provisions of prior income tax laws, plus the amount of income taxes paid during such year with respect to said taxable year or preceding taxable years, exceeded ninety percent (90%) of the taxpayer’s net income for each of such years, as computed without the benefit of the applicable deduction for contributions, then the deduction for contributions or gifts made to donees described in subparagraph (i) shall not be subject to any limitation whatsoever.
(C) Are described in this paragraph:
(i) Accredited educational institutions at university level established in Puerto Rico,
(ii) the José Jaime Pierluisi Foundation,
(iii) the National Fund for Financing Cultural Endeavors,
(iv) the Puerto Rico Community Foundation,
(v) a post or organization of war veterans, or an auxiliary unit or society of, or trust or foundation for, if any such post, organization, unit or society, trust or foundation have been organized in Puerto Rico, the United States or any of its states or possessions; provided, that no part of the net earnings of which inures to the benefit of any private shareholder or individual, and
(vi) The Curable Catastrophic Ilnesses Service Fund, created under §§ 3221 et seq. of Title 24.
(D) Contributions for the Celebration of the Centennial Anniversary of the Establishment of municipalities.— There shall be allowed as a deduction, without being subject to the limitations provided in paragraph (B), the payments or contributions made to any municipality of a historic or cultural value, as certified by the Institute of Puerto Rican Culture or the cultural center of each municipality, or that make possible the carrying out of work of historic or cultural value, when the amount of the contribution or donation is fifty thousand dollars ($50,000) or more and it is made for the celebration of the centennial anniversary of the establishment of said municipalities. The Secretary shall establish by regulations the requirements, conditions, and terms for taxpayers to claim this deduction.
(E) The Secretary may, when he/she deems pertinent, require the organization receiving any donation described in this clause, a verification of the amount donated by the taxpayer during a particular taxable year. In addition, the Secretary shall be empowered to prescribe through regulations those reports and statements to be filed by the entities receiving the donations allowed as deductions in this clause so that taxpayers may claim such deduction.
(4) Deductions for medical expenses.— In the case an individual, the amount by which the total amount of medical expenses not compensated by insurance or otherwise, paid during the taxable year exceeds six percent (6%) of his/her adjusted gross income. For purposes of this paragraph, the term “medical expenses” includes the following:
(A) Professional services rendered by physicians, dentists, radiologists, clinical pathologists, minor surgeons or nurses, or hospitals within or outside of Puerto Rico;
(B) accident or health insurance premiums;
(C) medications for human consumption, to be used in the diagnosis, cure, mitigation, treatment or prevention of diseases, that have been acquired solely and exclusively through medical prescription, if the same are prescribed by a physician authorized to practice medicine in Puerto Rico, and dispensed by a pharmacist licensed in Puerto Rico, and
(D) expenses incurred in the purchase of any assistive technology equipment for persons with disabilities, specialized treatment or chronic illness.
(i) Definitions.— For purposes of this paragraph the terms “person with disabilities”, “assistive technology equipment”, and “chronic illness or conditions”, and “treatment” shall have the following meanings:
(I) The term “person with disabilities” includes any person who, as a consequence or as a result of a congenital defect, a disease or a deficiency in his/her development, an accident or for any other reason suffers a condition that affects one or more of his/her main functions, such as: mobility, communication, self-care, self-direction, tolerance for work in terms of his/her own life or employability, or whose functions have been seriously affected, thus limiting his/her functions significantly.
(II) Assistive technology equipment.— Any object, equipment or system part purchased by the consumer or provided by any government agency or instrumentality, whether original, modified or adapted, that is used to maintain, increase or improve the capabilities of persons with disabilities. Including, but not limited to: wheelchairs, motorized wheelchairs, motorized equipment used for mobility, adapted computers, electronic communication equipment, adapted computer software, mechanical equipment for reading, headphones, among others.
(III) Chronic conditions or illnesses.— Included, but not limited to, are:
a. Anatomical loss or disorder that affects one or more of the following body systems: neurological, muscular-skeletal, respiratory, epidermal, gastric, auditory, visual, cardiovascular, reproductive, genital-urinary, hematological, lymphatic, and endocrine;
b. chronic illnesses that require regular intensive care or cardiovascular services;
c. cancer;
d. hemophilia;
e. HIV positive factor or Acquired Immunodeficiency Syndrome (AIDS);
f. mental and psychological disorders, such as: mental or emotional disorders and mental retardation;
g. other permanent or chronic conditions that require equipment or treatment which exceeds medical plan coverage.
(IV) Treatment.— Includes, but it is not limited to:
a. Cardiovascular or neurosurgical procedures.
b. Dialysis, hemodialysis, and related services including maintenance treatments for transplant patients.
c. Neonatal, regular or cardiovascular intensive care unit services.
d. Radiotherapy, cobalt, chemotherapy, and radio isotopes.
e. Hyperbaric chamber.
(ii) Verification.— The parent, guardian, custodian of or person with disabilities who claims the deduction provided in this paragraph shall attach to his/her tax return the invoice and receipt containing the information related to the cost of the assistive technology equipment, special treatment or chronic illness, and a medical certificate stating that such assistive technology equipment, special treatment or chronic illness is adequate and necessary for his/her condition or illness. In the case of returns filed electronically, the taxpayer must keep for his/her records the evidence of the deduction claimed under this paragraph, for a term of six (6) years.
(5) Interest paid on student loans at university level.— In the case of an individual, there shall be allowed as a deduction, the interest paid or accrued during the taxable year on indebtedness incurred for student loans to cover expenses of such individual, his/her spouse or dependent for registration and tuition fees and textbooks at university level, as well as expenses for transportation, meals, and room and board in those cases in which the student must live away from home in order to pursue such studies.
(6) Contributions to certain pensions or retirement systems.— Any contribution of money made by an individual to a pension or retirement system of a general character established by the Congress of the United States, the Legislative Assembly of Puerto Rico, the Government of the Capital, the municipalities and the agencies, instrumentalities and public corporations of the Government of Puerto Rico to the extent such contribution is included in the taxpayer’s gross income for the taxable year.
(7) Retirement savings.—
(A) Deductions allowed.— In the case of an individual, the contribution in cash of said individual to an individual retirement account, in accordance with § 30392 of this title, shall be allowed as a deduction.
(B) Maximum amount allowed as a deduction.— Except as provided in paragraph (C), the maximum amount allowed as deduction under paragraph (A) for the taxable year shall not exceed five thousand dollars ($5,000) or the adjusted gross income for wages or earnings attributable to professions or occupations, whichever is less.
(C) Maximum amount allowed as a deduction in the case of married individuals.— In the case of married individuals filing a joint tax return under § 30241(b)(1) of this title, the maximum amount allowed as a deduction under paragraph (A) for any taxable year shall not exceed ten thousand dollars ($10,000), or the aggregate adjusted gross income received for wages or earnings attributed to professions or occupations, whichever is less. The deduction for any taxable year for contributions to any individual retirement account established in the name and for the benefit of each spouse shall not exceed the amounts provided in paragraph (B).
(D) No deductions shall be allowed under this clause for one (1) taxable year in which the individual has attained the age of seventy-five (75).
(E) In the case of an employer, his/her contributions to a trust that complies with the provisions of § 30392(c) of this title, shall be allowed as a deduction on the tax return corresponding to the taxable year in which such contributions are made. The maximum amount allowed as a deduction for any taxable year shall not exceed the amounts provided in paragraph (B) for each participant or the adjusted gross income of each participant on account of wages and of the earnings attributable to professions or occupations, whichever is less. This deduction shall be in lieu of the deduction allowed under § 30121 of this title, but shall be subject in all other respects to the requirements of said section.
(F) In the case of an annuity or endowment contract described in § 30392(b) of this title, that part of the contribution paid under the contract applicable to the cost of life insurance shall not be allowed as a deduction under this paragraph.
(G) For purposes of this clause, it shall be considered that a taxpayer has made contributions to an individual retirement account on the last day of the taxable year, if the contributions are attributable to said taxable year and are made on or before the last day established in this part for filing the income tax return for said year, including any extension granted by the Secretary for the filing thereof.
(8) Savings for education.—
(A) Deductions allowed.— In the case of an individual, the cash contribution by said individual to an education savings account for the exclusive benefit of his/her children or relatives up to the third degree of consanguinity or second degree of affinity, as provided in § 30395 of this title, shall be allowed.
(B) Maximum amount allowed as a deduction.— The maximum amount allowed as a deduction under paragraph (A) for any taxable year shall not exceed five hundred dollars ($500) for each beneficiary. In those cases that more than one parent contributes to the account created for a beneficiary, the amount of the deduction shall be in accordance with the amount contributed by the parent who makes the deposit. The institution that receives the contributions shall issue the certifications corresponding to the contributions made in the order that such contributions are registered in the account, until said account receives the maximum amount allowed of five hundred dollars ($500) for said taxable year. There is no limit with regard to the number of educational savings accounts to which each individual may contribute, provided that each beneficiary of said accounts is described in paragraph (A) of this clause.
(C) No deduction shall be allowed, according to this clause, for the taxable year in which the beneficiary has attained the age of twenty-six (26).
(D) In the case of an annuity or endowment contract described in § 30395(b) of this title, that portion of the contribution paid under the contract applicable to the cost of life insurance shall not be allowed as a deduction under this section.
(E) For purposes of this paragraph, an individual shall be deemed to have made contributions to an education savings account the last day of the taxable year, if the contributions are attributable to said taxable year and are made on or before the last day established in this part for filing the income tax return for said year, including any extension granted by the Secretary for the filing thereof.
(9) Contributions to health savings accounts with a high annual deductible health plans.— Contributions to health savings accounts during the taxable year shall be subject to the provisions of § 30394 of this title.
(10) Loss of property as a result of certain acts of God.—
(A) Loss of property by fire, hurricane and other acts of God.—
(i) In the case of an individual, there shall be allowed as a deduction losses not compensated by insurance or otherwise, sustained during the taxable year from fire, hurricane or other acts of God, to the real property that, at the time of the event constitutes the principal residence of the taxpayer.
(ii) In the case of spouses who lived together at the close of their taxable year and choose the optional tax computation in § 30063 of this title or file separate returns, each one shall have the right to claim only fifty percent (50%) of this deduction.
(B) Loss of personal property as a result of certain acts of God.—
(i) Allowance. — In the case of an individual, there shall be allowed as a deduction the losses with regard to automobiles, furniture, household goods and other chattels, excluding the value of jewelry or cash, not compensated by insurance or otherwise sustained during the taxable year due to earthquakes, hurricanes, storms, tropical depressions, and floods occurring as a result of such unexpected events in an area subsequently designated by the Governor of Puerto Rico, as areas whose residents are eligible for assistance under the disaster assistance programs of the Government of Puerto Rico. This deduction shall be limited to five thousand dollars ($5,000); except that in the case of married individuals living together at the close of the taxable year and who chooses the optional tax computation in § 30063 of this title or file separate returns, the amount of the deduction shall not exceed two thousand five hundred dollars ($2,500). The amount of said loss not used in the year it is sustained, shall be an unexpected loss to be carried over to any of the two (2) subsequent taxable years, subject to the annual limits provided herein.
(ii) Requirements and verification.— In order to be entitled to the deduction provided in subparagraph (i), there shall be necessary that the affected area be designated a disaster area by the Governor of Puerto Rico and that the aggrieved taxpayer claim, within the term and place provided therefor, the assistance program benefits approved for disaster cases. A copy of the claim filed and approved to that effect, stating the losses sustained, must be submitted together with the income tax return. The method of appraising the loss and the amount to be deducted shall be determined by regulation.
(b) An individual who claims one or more deductions allowable under this section shall attach to his/her income tax return any cancelled checks, receipts, or certifications as proof for the deductions claimed. The preceding notwithstanding, the Secretary may, when he/she deems pertinent, exempt the taxpayer from this requirement for any particular taxable year. The taxpayer shall keep the evidence in connection with the deduction claimed under this paragraph for a period of six (6) years.
History —Jan. 31, 2011, No. 1, § 1033.15, retroactive to Jan. 1, 2011; Dec. 10, 2011, No. 232, § 34; June 30, 2013, No. 40, § 18.