Individual13 min2025-02-25

Bona Fide Residency Requirements: Complete Guide for Act 60 Individual Decree

Master bona fide residency under Act 60. Learn 183-day requirements, documentation strategies, acceptable evidence, and expert tactics to maintain your tax status risk-free.

By Alfonso Rodriguez, CPA - Virtus Advisory

Bona Fide Residency: The Key to Your Act 60 Individual Decree

CRITICAL 2025 UPDATE: With Act 60's extension through 2055 and increased state residency audits in Puerto Rico, authorities have intensified bona fide residency verification. New applicants post-2026 must certify they have not been Puerto Rico residents for the previous 6 years, adding complexity to establishing genuine residency.

Bona fide residency is the most critical—and most misunderstood—requirement for Act 60 Chapter 2 (individual decree) beneficiaries. A single compliance error can cost millions in lost tax savings.

This comprehensive guide explains exactly what constitutes bona fide residency, how to document it properly, and the proven strategies successful beneficiaries use to maintain their status risk-free.

What Is Bona Fide Residency and Why It Matters

The Legal Definition

Bona fide residency in Puerto Rico means Puerto Rico is your true and principal home. It's not simply spending physical time on the island—it's establishing your economic, social, and personal center of life here.

The three pillars of bona fide residency:

  • Physical presence: 183+ days in Puerto Rico

  • Center of vital interests: Your principal life is in PR

  • No available home: Outside PR for more than 90 days

    • The Cost of Losing Bona Fide Residency

    Real example:

  • Investor with $2M USD in annual capital gains

  • With bona fide residency: 0% taxes = $0 USD

  • Without bona fide residency: 23.8% taxes = $476,000 USD

  • Cost of error: $476,000 USD annually

    • Actual revocation cases:

  • 2022: 12 decrees revoked for residency issues

  • 2023: 18 decrees under review for questionable residency

  • Average lost time: 3-5 years to recover status

    • The 183-Day Requirement: More Complex Than It Appears

    How Days Are Counted

    Complete day in PR = 1 day

  • Arrive before midnight AND

  • Stay past midnight

    • Arrival day:

  • Arrive before midnight = counts as complete day

  • Arrive after midnight = does NOT count

    • Departure day:

  • Leave after midnight = counts as complete day

  • Leave before midnight = does NOT count

    • Practical example:

  • Monday 10pm: Arrive in San Juan = Tuesday counts

  • Friday 11pm: Leave San Juan = Friday does NOT count

  • Total: Tuesday + Wednesday + Thursday = 3 days

    • Special Days that DON'T Count

    Transit days:

  • Airport stopovers in PR (less than 24 hours)

  • Technical connection flights

  • Medical emergencies outside PR

    • Questionable days:

  • Hospitalizations outside PR

  • Extended family emergencies

  • Required work outside PR

    • Safe Counting Strategies

    Golden rule: Target 200+ days

  • 17-day safety margin

  • Emergency buffer

  • Complete peace of mind

    • Daily documentation:

  • Detailed calendar with activities

  • Geo-located photos

  • Date-stamped receipts with location

  • Meeting and event records

    • Center of Vital Interests: Where Your Real Life Is

    What Hacienda Evaluates

    Economic factors:

  • Where your principal investments are located

  • Where you have active bank accounts

  • Where you conduct commercial activities

  • Where you generate income

    • Personal factors:

  • Where your immediate family lives

  • Where you have memberships and affiliations

  • Where you participate in social activities

  • Where you receive medical services

    • Physical factors:

  • Where you have your principal residence

  • Where you keep personal possessions

  • Where you have utility services

  • Where you're registered to vote

    • Building Center of Interests

    Year 1: Basic establishment

  • Principal bank account in PR

  • Residence as primary address

  • Voter registration in PR

  • PR driver's license

    • Year 2: Social deepening

  • Local club memberships

  • Community activity participation

  • Social routine establishment

  • Friend circle development

    • Year 3+: Complete integration

  • Local property investments

  • Local business participation

  • Organizational leadership

  • Establishment as "local"

    • The Available Home Rule

    What Constitutes "Available Home"

    Definitely counts:

  • House you own outside PR

  • Apartment in your name

  • Family home where you have keys

  • Office with sleeping facilities

    • Gray area:

  • Friend's house with regular access

  • Favorite hotel with permanent reservations

  • Club with lodging facilities

  • Regularly reserved Airbnb

    • Does NOT count:

  • Hotels without specific reservations

  • Family home without free access

  • Office for daytime work only

  • Properties actively for sale

    • Compliance Strategies

    Option 1: Eliminate properties

  • Sell all properties outside PR

  • Keep only investment properties (non-residential)

  • Use hotels for temporary stays

    • Option 2: Limit access

  • Rent properties for more than 90 days

  • Rent without personal use rights

  • Sell but maintain right of first refusal

    • Option 3: Document non-availability

  • Rental contracts prohibiting personal use

  • Renovations making uninhabitable

  • Documented exclusive commercial use

    • Documentation: Your Line of Defense

    Daily Documentation System

    Master calendar:

  • Geo-located application

  • Daily photos with timestamp

  • Documented specific activities

  • People who saw you

    • Digital evidence:

  • Social media posts with location

  • Business establishment check-ins

  • Bank transactions with location

  • Phone calls from PR numbers

    • Physical evidence:

  • Restaurant and service receipts

  • Event and activity tickets

  • Local grocery purchases

  • Medical and professional services

    • Center of Interests Documentation

    Banking evidence:

  • PR bank account statements

  • Regular activity in local accounts

  • Investments made from PR

  • Local service payments

    • Social evidence:

  • PR organization memberships

  • Local event participation

  • Local cause donations

  • Documented volunteer work

    • Residential evidence:

  • Utility bills

  • Service contracts (internet, cable)

  • Mail directed to PR

  • Property renovations and improvements

    • Red Flags to Avoid

    Suspicious patterns:

  • Exactly 183 days (too close)

  • Concentrating days at year-end

  • Long consecutive periods outside PR

  • Principal commercial activity outside PR

    • Documentary inconsistencies:

  • Dates that don't match between evidence

  • Impossible activities (being in two places)

  • Long gaps without documentation

  • Evidence suggesting residency elsewhere

    • Expert Strategies

    The 200-Day Method

    Annual planning:

  • Target: 210+ days (maximum margin)

  • Distribution: 17-18 days per month

  • Flexibility: 10-day emergency buffer

  • Monitoring: Weekly progress tracking

    • Smart distribution:

  • January-March: 45 days (high season)

  • April-June: 55 days (avoid late hurricanes)

  • July-September: 45 days (hurricane minimum)

  • October-December: 65 days (holidays and closing)

    • Building Local Routine

    Documentable weekly routines:

  • Same church/temple on Sundays

  • Same gym regularly

  • Favorite restaurants with staff who know you

  • Local doctor/dentist for check-ups

    • Monthly routines:

  • Regular social events

  • Networking meetings

  • Volunteer activities

  • Cultural venue visits

    • Annual routines:

  • Local holiday celebrations

  • Seasonal events (Festival Casals, etc.)

  • Community cause participation

  • Annual community investments

    • Emergency Management

    Emergency protocol:

  • Document the emergency immediately

  • Notify your legal team within 24 hours

  • Minimize time away from PR

  • Document trip reason completely

  • Return ASAP and document return

    • Generally accepted emergencies:

  • Serious family medical emergencies

  • Death of close family member

  • Natural disasters requiring evacuation

  • Unavoidable legal obligations

    • Questionable emergencies:

  • "Urgent" business trips

  • Important social events

  • Investment opportunities

  • Scheduled family vacations

    • Residency Audits: What to Expect

    Common Triggers

    Red flags that attract attention:

  • Days exactly at minimum

  • Principal economic activity outside PR

  • Immediate family living outside PR

  • Significant properties outside PR

  • Questionable travel patterns

    • Audit Process

    Phase 1: Documentary review

  • Complete calendar request

  • Presence evidence review

  • Travel pattern analysis

  • Center of interests verification

    • Phase 2: Independent verification

  • Interviews with people who know you

  • Verification with local establishments

  • Third-party record review

  • Cross-reference with public records

    • Phase 3: Determination

  • Evaluation of all evidence

  • Consideration of good faith efforts

  • Decision on residency status

  • Penalties or adjustments if necessary

    • How to Defend Yourself

    Proactive preparation:

  • Meticulous documentation always

  • Local person testimony

  • Community integration evidence

  • Professional representation

    • During audit:

  • Complete but careful cooperation

  • Organized evidence presentation

  • Emphasis on commitment to Puerto Rico

  • Focus on substance over form

    • Profile-Specific Strategies

    Single Individual

    Advantages:

  • Total schedule flexibility

  • Easy presence documentation

  • No family complications

  • Quick decision making

    • Specific strategies:

  • Build strong social network in PR

  • Establish visible regular routines

  • Document lifestyle integration

  • Create meaningful community ties

    • Married Couple

    If spouse also moves:

  • Both need 183+ days

  • Easier to establish center of interests

  • Shared documentation evidence

  • Joint community involvement

    • If spouse stays in US:

  • More difficult but possible

  • Requires careful documentation

  • Must show PR is primary residence

  • Need strong business/investment ties

    • Family with Children

    Unique challenges:

  • School schedule considerations

  • Family emergency complications

  • Higher center of interests scrutiny

  • More complex logistics

    • Specific strategies:

  • Enroll children in PR schools

  • Document family activities in PR

  • Build family community connections

  • Plan family vacations from PR

    • Continuous Monitoring and Maintenance

    Tracking System

    Daily tracking:

  • Location documentation

  • Activity logging

  • Photo evidence

  • Expense records

    • Weekly reviews:

  • Progress toward 183+ goal

  • Quality of evidence collected

  • Gaps in documentation

  • Upcoming travel plans

    • Monthly assessments:

  • Days accumulated vs. target

  • Center of interests evaluation

  • Evidence quality review

  • Strategy adjustments needed

    • Professional Support

    Legal team:

  • Regular compliance reviews

  • Audit preparation assistance

  • Emergency response planning

  • Regulatory update notifications

    • Accounting team:

  • Integration with tax planning

  • Documentation standards

  • Record keeping systems

  • Compliance verification

    • Conclusion: Bona Fide Residency as Lifestyle

    Successful bona fide residency isn't just about counting days—it's about making Puerto Rico your real home. When you genuinely embrace life in PR, compliance becomes natural rather than forced.

    Key principles:

  • Quality over quantity: 200 well-documented days beats 185 questionable ones

  • Integration over isolation: Become part of the community

  • Proactive over reactive: Plan and document everything

  • Professional over DIY: Get expert guidance

    • Your success depends on:

  • Understanding the rules completely

  • Building genuine ties to Puerto Rico

  • Maintaining meticulous documentation

  • Having professional support when needed

    • Remember: Bona fide residency is the foundation of your entire Act 60 strategy. Protect it like the valuable asset it is.

    Secure Your Bona Fide Residency

    Concerned about your residency documentation? Need help building bulletproof systems to maintain your status?

    Our Residency Compliance Program includes:
    ✅ Complete residency audit and gap analysis
    ✅ Custom documentation systems setup
    ✅ Monthly compliance monitoring
    ✅ Emergency response protocols
    ✅ Audit defense representation

    Don't risk your millions in tax savings over documentation issues. Let us help you build and maintain perfect bona fide residency.

    ---

    *Questions about your specific residency situation? Our team specializes in helping high-net-worth individuals establish and maintain bulletproof bona fide residency under Act 60.*

    Need Personalized Act 60 Guidance?

    Our experts can help you implement these strategies specifically for your situation. Get personalized guidance from Puerto Rico's most experienced practitioners.

    Start Free AssessmentMore Articles

    Related Expert Analysis

    Application Process

    How to Apply for Act 60 Decree: Complete Guide

    Step-by-step process to obtain your tax incentive decree with expert guidance and insider tips.

    Compliance

    Act 60 Annual Obligations: Complete Checklist

    Keep your decree secure by complying with all annual obligations. Critical deadlines and requirements.