Tax implications in Puerto Rico

[PRTax]

Hi,

I am a Canadian looking to purchase a vacation property in Puerto Rico (initially not for rent, but potentially for rental income in the years to come). I am trying to understand the tax implications of such a purchase. It is not clear to me whether the same rules as purchasing a home in the main land U.S. apply, or whether it is different.

I was hoping someone might be able to help me understand:
1) Does the concept of Substantial Presence apply when you are in the PR? i.e if I'm in PR for >31 days using "the formula", does that give me substantial presence in the U.S. requiring me to file taxes?
2) Assuming this is a long term purchase (i.e retirement, 30+ years) that would eventually make income, is it recommended to use a corporation or trust or partnership to purchase the property?

Thanks

[nelsona]

1. Time spent in PR does NOT count towards the Substantial presence test, not that it would matter in the least in your case.

I would start by looking at IRS Pub 570 for their rules.