Gentrification in Puerto Rico: Act 60, Rentals, and Resistance

Gentrification in Puerto Rico is being driven by federal tax breaks that reward mainland newcomers, a surge of short-term vacation rentals, and a slow, uneven recovery from Hurricane Maria, and it is pricing longtime residents out of neighborhoods and coastal towns they have lived in for generations. Home prices and rents are rising faster than local wages can absorb, entire blocks in San Juan have been bought up for resale or conversion to Airbnbs, and small coastal municipalities like Rincón have seen fishing families replaced by luxury condos marketed to outside investors.

Act 60 and the Tax Break That Started It

The engine behind the current wave of displacement is Act 60, a package consolidated in 2019 from earlier laws including Act 22 (2012) and Act 20. It offers people who move to Puerto Rico and stay at least 183 days a year a 4% corporate tax rate, a 0% rate on capital gains, interest, and dividends accrued after they relocate, a 75% property tax exemption, and a 50% municipal license tax exemption. Grants last up to 15 years and can be renewed.¹

Puerto Ricans who never left the island generally cannot claim these same benefits. The program requires that applicants not have been residents during a lookback period before applying, so it structurally favors newcomers. Many beneficiaries hold remote jobs tied to mainland companies, which means their presence adds little to local employment.² Economist Joseph Stiglitz has called the setup an example of “disaster capitalism.”³

Roughly 27,000 people relocated to the island between 2021 and 2022, many drawn by these incentives. Cryptocurrency firms including Pantera Capital and Redwood City Ventures set up operations in San Juan, and activists and some political leaders have taken to calling the arrivals “crypto colonizers.”²

What Housing Actually Costs Now

The median home sales price in Puerto Rico hit $290,000 in the first quarter of 2025, up 32% year over year. The last quarter of 2024 recorded a 22% annual gain in home values, the largest since Federal Housing Finance Agency records began in 1995.⁴ By the fourth quarter of 2025, the house price index was still climbing at nearly 15% year over year.⁵ In San Juan, median listing prices reached $905,000 as of January 2024. Average household income on the island was roughly $38,227.⁶

Rents have followed. Median gross rents rose about 4% a year between 2020 and 2023, four times the pace of the previous decade.⁷ One-bedroom rents in San Juan averaged $1,900 a month by early 2026.⁵ Almost 45% of renter households now spend more than 30% of income on housing, and 30% spend more than half. Among extremely low-income renters, 76% are cost-burdened and 63% severely so.⁸

The shortage of homes affordable to renters with extremely low incomes stands at 54,915. For every 100 such households, only 66 affordable and available homes exist.⁸ Younger residents are being locked out of ownership: the homeownership rate for householders aged 25 to 34 was just 31.7% in 2023, well below the nationwide 41.3%.⁷

The Short-Term Rental Effect

Short-term rental listings grew from about 1,000 in 2014 to more than 25,000 by 2023.⁴ Research by the Center for a New Economy found that a 10% increase in the density of short-term rentals in a San Juan neighborhood led to an average 7% rise in median rent and a 23% rise in median home prices the following year.⁹ In Culebra, short-term rentals accounted for up to a third of all housing units.⁸

Until recently, Puerto Rico had no comprehensive rules for these rentals. Existing law imposed only a 7% room occupancy tax meant to level the playing field with hotels.⁹ Senate Bill 238, which would set up a municipal registry and uniform licensing framework, passed the Puerto Rico Senate in November 2025.¹⁰ An earlier attempt, House Bill 1557, was rejected in the summer of 2024.¹¹

How Hurricane Maria Sped It All Up

Maria did not invent Puerto Rico’s gentrification, but it accelerated it. About a third of the island’s homes, some 400,000 houses, needed repair or reconstruction after the September 2017 storm.¹² An estimated 130,000 residents left for the mainland afterward.¹³ What was left behind, damaged, vacant, and undervalued property, drew outside investors.

Between 2018 and 2021, housing prices rose 22%. A market that had a surplus of unsold homes shifted to one with bidding wars above appraisal value and a severe deficit of affordable housing.¹⁴ Federal recovery money moved slowly. Of $18.3 billion in federal housing recovery funds available, only about $824,000 had been disbursed as of July 2022.¹⁵

Some of the most vulnerable residents were shut out of recovery entirely. Programs like CDBG-DR required formal proof of homeownership. Before the hurricanes, up to 55% of housing in Puerto Rico was estimated to be “informal,” meaning self-built, without formal title, or built without permits.¹² Those families often could not access FEMA assistance either, and stayed in what researchers described as a “temporal limbo” as wealthier buyers moved in nearby.

Where Displacement Is Most Visible

San Juan

Investors have bought entire blocks in San Juan, or multiple buildings at once, remodeling them for resale at higher prices or converting them to vacation rentals.⁶ Researchers have documented high-opportunity metro neighborhoods where vacancy rates and prices both rise, a pattern that suggests owners are keeping units empty while waiting for a bigger sale rather than renting to local residents.¹⁶ Some businesses now cater almost entirely to English-speaking tourists and newcomers, and residents describe those spaces as effectively closed to Puerto Ricans.

Rincón and Coastal Towns

Rincón, a small western surf town of roughly 1,500 permanent residents with 42% of its population below the poverty line, receives an estimated 100,000 visitors and part-time residents a year and hosts 70 to 80 hotel-like facilities plus about 1,000 active Airbnb listings. Luxury developments like the Dos Ceibas complex have marketed to mainland investors with promised returns of 73% relative to comparable New York investments. Traditional wooden waterfront homes owned by fishing families have given way to condos, mansions, and vacation rentals. In 2016, a natural spring called the “Ojo de Agua,” used for generations as a community gathering place, was sealed and covered with concrete for a hotel project that was never finished.¹⁷

Coastal Development and the Environmental Cost

Puerto Rico’s coastline stretches nearly 700 miles, about two-thirds of the island’s 3.2 million residents live in coastal areas, and more than 60 miles of shoreline have already receded from erosion.¹⁸ Coastal construction permits have often been issued without site inspections, and developers have misrepresented the high-water mark to build inside the maritime-terrestrial zone, where construction is legally prohibited.¹⁹

Development has destroyed mangroves and wetlands, including in Las Mareas in Salinas, where illegal shoreline construction prompted a criminal investigation by federal authorities and the Puerto Rico Justice Department.²⁰ In Rincón, the Sol y Playa condominium project encroached on a hawksbill turtle nesting ground.¹⁹ Sea-level rise projections of 0.33 to 3.75 meters by 2100 mean much of this new construction is likely to face chronic flooding within decades.²¹

House Bill 25, authored by the Puerto Rico Builders Association, would redefine the maritime-terrestrial zone using only astronomical tide data from NOAA gauges, dropping the current legal criterion that also accounts for wave reach during storms. The ACLU of Puerto Rico and more than 50 environmental organizations argue the change would shrink the public domain and open previously protected coastline to luxury construction. The bill passed the Puerto Rico House of Representatives in January 2026 and is under evaluation by the Senate Committee on Tourism, Natural Resources, and Environmental Affairs.²²

How Residents Are Fighting Back

A coastal movement organized under the slogan “Las playas son del pueblo” (“The beaches belong to the people”) has staged “party protests” at threatened sites. At Los Almendros beach in Rincón, activists set up “Camp Carey,” named for a hawksbill turtle, and have maintained a presence since 2021 to protest the Sol y Playa condominium. A lower court ruled in favor of demolishing the condominium’s illegal pool structure, though the condo board has repeatedly appealed. Activists have physically dismantled parts of construction they deem illegal and have raised money to hire independent surveyors to verify public coastal boundaries, citing distrust of government demarcation.²³

Community organizations like El Puente have used Bomba y Plena performances, local markets, and cultural events to reassert Puerto Rican identity in gentrifying spaces. Protests in San Juan have carried banners reading “Puerto Rico for Puerto Ricans.”⁶

In September 2022, Bad Bunny released “El Apagón” (“The Blackout”) from his album Un verano sin ti. Midway through the music video, he inserted a short documentary titled “Aquí Vive Gente” (“People Live Here”), reported by independent journalist Bianca Graulau, that examined the displacement tied to Act 60, the privatization of the electrical grid, the conversion of homes into Airbnbs, and restricted public beach access. The chorus, sung by Gabriela Berlingeri, states: “I don’t want to leave here. They should leave.”²⁴ The video passed 8 million YouTube views and drew responses from viewers across Latin America, Africa, and Europe who saw parallels to displacement in their own communities.²⁵

What Governments Are Doing

In late October 2024, Representative Delia Ramirez and 11 Democratic co-sponsors introduced House Resolution 1553, the “United with Puerto Ricans Opposed to Act 22 Risks” (UPROAR) Act. It argued that Act 60 had “oversaturated the housing market” and cited a reported 600% increase in rent prices from July 2022 to September 2023, calling the law responsible for “fueling displacement, rising prices, and reckless development across the island.”²⁶ Puerto Rico Independence Party Senator María de Lourdes Santiago Negrón has filed legislation seeking to repeal Act 22 provisions entirely.³

The territorial government did not repeal Act 60. On March 10, 2026, Governor Jenniffer González-Colón signed Act No. 38-2026 into law. It creates a two-track system: applications filed on or before December 31, 2026, keep the original 0% tax rate on capital gains, interest, and dividends, while applications filed on or after January 1, 2027, face a 4% fixed rate on those categories. The program is extended through December 31, 2055, for new applicants. The lookback period stretches to six years before relocation, residential property must be registered in the individual’s name rather than through a broader legal entity, and applicants must submit a criminal record report, with financial-crime convictions grounds for denial.²⁷

The IRS launched a compliance campaign in 2021 targeting Act 60 beneficiaries who allegedly claimed benefits without meeting residency requirements. By July 2023, the agency reported it was investigating approximately 100 high-wealth individuals.²⁸ Puerto Rico’s tax agency, Hacienda, has audited approximately 1,800 Act 20 and Act 22 decree holders. Cases have already reached the courts, including one crypto investor who pleaded guilty to tax evasion and another where the IRS asserted a 75% fraud penalty on a nearly $5 million deficiency.²⁹

On the housing side, the Puerto Rico Housing Finance Authority’s 2025 Qualified Allocation Plan directed over $23 million in Low-Income Housing Tax Credits and $83.8 million earmarked for converting industrial and commercial properties into low- and moderate-income housing.³⁰ Over 87,000 rental homes on the island receive some form of federal subsidy, including more than 48,000 public housing units, though nearly one in ten federally assisted homes face depreciation or exit risk within five years.⁸ The Puerto Rico BEACHES Act, introduced in June 2025 by Resident Commissioner Pablo José Hernández Rivera and Congressman Jared Huffman, would direct the GAO to study the economic and environmental impacts of coastal erosion and issue federal recommendations for affected communities.¹⁸

As of 2023, nearly 40% of Puerto Rico’s residents lived below the poverty line, and the island’s unemployment rate was 9.2%.⁸ The same economic recovery that has brought unemployment down to historic lows and payrolls to their highest level in over 15 years has also brought the investment, construction, and speculation that are pricing residents out of their own island.⁷

1
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2
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3
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