A new appraisal mechanism for real property taxes was introduced  by an amendment to the Municipal Property Tax Act of 1991, signed into law on February 12, 2019 (Act 6-2019). 

This amendment allows for a new mechanism to appraise real property (including improvements) not previously appraised by the Municipal Revenue Collection Center (CRIM, by its Spanish acronym). With this new method for real property taxes appraisal, the property owner may engage an Authorized Professional Appraiser (APA) to determine the classification and tax liability of real property. This mechanism is only available when there is no mortgage creditor.

What is an Authorized Professional Appraiser?

It's a person with a valid license issued by the Professional Real Estate Appraisers of Puerto Rico's Board of Examiners (BEPREA). This person performs the corresponding procedures to determine the value of real property. The APA individual contracted may not be the owner, an employee of the owner, nor be related to the owner within the fourth degree of consanguinity or the second degree of affinity.

What kind of property can be appraised under this new method?

This new method may be used to appraise the following property:

  • any property that has not been appraised by the CRIM
  • any new construction; and/or
  • substantial improvements not appraised, made to a real property that has been appraised before.

What are the benefits of using thE NEW APPRAISAL method?

As an incentive to use this new appraisal method, the taxpayer will have the benefit of deducting from the tax liability the amount of expenses incurred in the appraisal (up to $500),  once it is submitted to the CRIM. As an additional benefit, the Act states that the imposition, notification and collection of the corresponding tax will be prospective as of the date on which the appraisal is made.

How to apply

The APA individual hired by a taxpayer must submit to the CRIM a contracted appraisal form (Model AS-79), accompanied by the following documents:

  1.  Public Deed of Property
  2.  Appraisal Report
  3.  Valid License of the APA who appraised the property, issued by the BEPREA
  4.  Exemption Form (Form AS-38)
  5.  Tax Exemption Application (Form BC-71)
  6.  Payment of the tax liability determined according to the appraisal contracted by the owner

To benefit from the provisions under this Act, all the documentation listed above (including the payment determined) must be submitted by December 31, 2020, or within six (6) months after the acquisition of the property, or six (6) months after the construction of an improvement.

At RSM Puerto Rico, we can advice you on this new appraisal method. Please contact our tax advisors at (787) 751-6164 | [email protected] for help or more information.

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