Learn about the properties that do not pay CRIM
September 5, 2022
By Maricarmen Rivera Sánchez
El Nuevo Día
When it comes to paying property taxes to the Municipal Revenue Collection Center (CRIM), one of the best known exemptions is the one that eliminates this payment for primary residences. However, there are other exempt categories.
Exemptions to this tax include veterans, historic properties, newly constructed homes, cooperatives and non-profit organizations such as churches, universities and schools, among others.
Edwin Hernández, CRIM's assistant director of operational services, explained that some of these exemptions are processed through the banking institutions as part of the mortgage closing. But they can also be requested by taxpayers.
In the case of the tax exemption for historic buildings or homes, the application is made with a document from the Institute of Puerto Rican Culture (ICP) and its Historic Built Heritage Program. This benefit applies to areas designated as historic in: Old San Juan, Miramar, Sagrado Corazón, Arroyo, Ensenada in Guánica, Guayama, San Germán, Coamo, Manatí, Caguas, Ponce and Vega Baja.
He explained that, under Act 60 of 2019 - Puerto Rico Incentives Code - these procedures are managed with the Department of Economic Development and Commerce and it is the CRIM who grants the exemption.
"Who gives the exemption is the DDEC (Department of Economic Development and Commerce) and CRIM's function is to receive that document and grant that exemption," he explained.
He reminded that the homestead exemption covers the first $15,000 of the property tax.
"This exoneration has a limit, depending on the taxable value of a property. The payments, for tax purposes, are relatively low and do not adjust to the reality of today's construction costs. That is why up to $15,000 of the taxable value is exempted," he explained. "Normally, a property that has a value of $200,000 or more is a property that exceeds that $15,000. If the property has a taxable value of $20,000, you have to pay the difference of $5,000″.
Another exemption that exists by law is for persons who have served in the U.S. Army and who are veterans. In these cases, the exemption is $5,000 of the taxable value.
"You can combine that with the homestead exemption and technically it would be exempt up to $20,000 if you combine them. If you are disabled, you give yourself a full exemption," he said.
Among the most requested exemptions, he detailed, are those that apply to non-profit entities, to which the exemption on the payment of property taxes applies "as long as a property is in the possession of the non-profit entity and that property is used for that purpose".
"Another very common one is agriculture. Agronomists or experts certify which properties are going to be exempt. They have to comply with certain requirements, such as being a bona fide farmer, keeping the land under cultivation. We can exempt 10 cuerdas out of 20 cuerdas," he explained, adding that international banking entities are also exempt.
There is another exemption for new or recently constructed properties. These structures do not pay CRIM for the first five years. Hernandez clarified, however, that this exemption is not absolute.
"It used to be that total exemption was given and the value of the transaction was not taken into consideration. The property could have cost $2 million and it didn't matter, it was exempt. Now it was capped with Act 52 of 2022 and the cap is up to $300,000. If it is a purchase over $300,000, it would not qualify for the five-year exemption. That's going to be the case until 2025. After 2025, that exemption is going to expire," he added.
Housing cooperatives and social housing are also exempt from CRIM.
There are 1.3 million properties in Puerto Rico. Of those, the CRIM estimates that there are some 230,000 that do not appear in its registry. It was not possible to find out how many properties are exempt from payment to the CRIM.
Ramón Olivencia Gayá, notary attorney, stated that many of the requests for exoneration for primary residence are made during the mortgage closing process and the banks are the ones who do the process. However, in the case that it is not a purchase and sale with financing, an affidavit must be made as part of the process.
"When it is done with the deed, it is sworn because it is a matter of public interest and requires an oath," he said. "The cost varies. There is no set cost, but it is going to depend on the lawyer or attorney who does the paperwork."
The process can take months, unless the lawyers do it through the CRIM page on a platform that costs $50 per hour.
"If you take it printed to CRIM they put it on a list and it can take months for them to process it. Other times there are internal errors because CRIM doesn't have this mechanized. It has a mechanized system, but it is limited and only available to banking. Since last year, law firms can access the CRIM platform that allows us to do these transactions, but that costs us $50 an hour and can be very expensive," he added.
Isamar Correa, president of the Bar Association's Government Affairs Committee, urged taxpayers to take the documents in person to CRIM and make sure that the documents are stamped or stamped by an agency official.
"I always recommend filing in person because it forces a CRIM officer to attend and check that they are complete and make sure the document is stamped," he explained. "Otherwise, it is very difficult to refute anything to the CRIM.
