Donations or transfers of property above $10,000 are reported on an informative return due each year on January 31. A detailed description and good faith estimate of the value of donated property must be included. The basis of the property donated is the basis of the donor at the time of donation.

There is no inheritance and gift tax in Puerto Rico. The basis of any bequeathed property will be the same as in the hands of the decedent.

An informative return must be filed within 12 months of the death of a taxpayer in Puerto Rico. The informative return must contain a detailed description of the transferred property. A valuation of property is not required. After the informative return is filed, the Secretary of Treasury will issue a cancelation of lien certificate so long as the taxpayer does not owe any tax imposed by the Code or any personal or real property taxes to the Municipal Revenue Collections Center (CRIM). Each lien certificate should be certified and should not reflect unpaid taxes through the date of filing the Puerto Rico informative return. The CRIM certificate should also include the property ID number.

For 2024, the death of a Puerto Rico resident who held US property will receive a $60,000 Federal Estate tax exemption upon transfer. US residents will receive a $13,100,000 Federal Estate tax exemption. Residents (and nonresidents) with property in the US and Puerto Rico generally establish a trust or corporate structure as part of tax planning.

For property in a trust, so long as the trust remains in revocable status, it is a grantor trust, and is disregarded for federal income tax purposes. Accordingly, Form 1041, US Income Tax Return for Estates and Trusts is not required unless elected to otherwise.

Form 706 is used to elect to transfer of portability (the unused portion of the allowable exemption), or when the fair value of property in the United States held by the decedent exceeds the allowable exemption amount.

The extended deadline to file Form 706 two years after the decedent’s death date is only available for transfers of portability.