Compare a Traditional Investment with an Investment in PRRE
Indicate whether you are a Puerto Rico resident, how much you wish to invest, and your annual taxable income. The simulator estimates your potential returns over a 24-month period and, where applicable, the potential impact of the 60% super deduction on your investment, available to accredited investors What Is an Accredited Investor? For an individual, it is sufficient to meet one f the following criteria; you do not need to satisfy all of them: • Net worth: More than $1,000,000, individually or jointly with a spouse or partner, excluding the value of your primary residence. • Ingresos: More than $200,000 individually, or more than $300,000 jointly with a spouse or partner, in each of the two most recent years, with a reasonable expectation of reaching the same income level in the current year. • Professional licenses: Hold a valid Series 7, Series 65, or Series 82 license. • Relationship with the issuer: Be a director, executive officer, or general partner of the company issuing the securities, or of a general partner of that company. • Private fund: Be a knowledgeable employee of the private fund with respect to an investment in that fund. • Family office: Be a family client of a family office that qualifies as an accredited investor and meets the applicable requirements. These criteria are alternative, meaning you only need to satisfy one of them. Different qualification criteria apply to entities. who are residents of Puerto Rico.
Returns, Tax Savings & Estimated ROI
The tax savings shown are illustrative estimates only and do not represent cash distributions from PRRE. For eligible Puerto Rico residents, the ROI displayed reflects the deduction of the 1.25% annual management fee during the first two years.
Two Scenarios for the Same Investment
To make the comparison straightforward, both scenarios use the same gross rate of return. The first scenario represents an investment in a traditional company that is not PRRE. The second represents an investment in PRRE.
Investment in a Traditional Company
This is not an investment in PRRE. It does not include the Opportunity Zone tax exemption or the 60% super deduction.
Investment in PRRE
Includes estimated tax savings from the exemption on eligible investment returns and, for eligible Puerto Rico residents, the 60% super deduction available through a Puerto Rico Private Equity Fund.
Projection of Returns, Tax Savings & ROI
Para residentes elegibles, la superdeducción potencial equivale al 60% de la inversión. Cada año se modela un uso máximo equivalente al 30% del ingreso tributable anual antes de la deducción, y el saldo restante continúa disponible para años siguientes dentro del período proyectado. Durante los primeros dos años también se incluye el ahorro estimado del 15% sobre los rendimientos de PRRE y el management fee de 1.25% anual.
| Year | Available Super Deduction | Taxes Before Applying the Super Deduction | Taxes After Applying the Super Deduction | Tax Savings from Super Deduction | Tax Savings from 0% Tax on PRRE Returns | PRRE Returns | Management fee 1.25% | Return on Investment (ROI) |
|---|---|---|---|---|---|---|---|---|
| TOTALProjected Period |
Assumptions Used
- Investments from $50,000 to $249,999 are assumed to earn a 9% annual return; investments from $250,000 to $999,999, a 10% annual return; and investments of $1,000,000 or more, an 11% annual return.
- Investors may choose between a compounded scenario, in which the preferred return is compounded monthly, or a monthly distribution scenario without compounding, in which the annual return is always calculated based on the original principal. The original principal is assumed to be returned at the end of the 24-month investment period.
- The same gross rate of return is used to compare both investment scenarios.
- For the regular investment, an illustrative 15% tax rate on eligible dividends is applied.
- For PRRE, the calculator assumes a 0% Puerto Rico tax rate on eligible returns and presents the 15% tax as estimated savings compared to a regular investment.
- For eligible Puerto Rico residents, the super deduction is modeled as 60% of the investment, subject to an annual limit equal to 30% of annual taxable income before applying the deduction.
- To estimate the tax savings generated by the super deduction, Puerto Rico residents may choose between the ordinary progressive tax brackets built into the simulator, a fixed 15% tax rate, a preferential 4% tax rate under Act 60, or a custom fixed tax rate.
- The tax rate selected for annual taxable income affects only the calculation of the tax savings generated by the super deduction. The 15% tax rate used to compare a traditional investment with the 0% tax rate modeled for eligible PRRE investment returns is a separate assumption.
- For Puerto Rico residents, a 1.25% annual management fee on the investment is deducted during the first two years only.
- The super deduction projection covers up to a maximum of fifteen (15) years, for illustrative purposes only.
- The simulator assumes that annual taxable income and the selected tax treatment remain constant throughout the projected period.
This simulator is provided for illustrative purposes only and is not intended to serve as the basis for any investment or tax decisions. Your actual circumstances may differ, and applicable laws and regulations may change. The tax rates and tax treatments selected by the user are simulation assumptions only and do not determine your actual tax liability. Use this information solely as an example for discussion with your CPA, accountant, tax advisor, and legal counsel, and review the offering documents before making any investment or claiming any tax benefit.