Many investors exploring Puerto Rico Act 60 focus heavily on one number: 183 days. For individuals seeking relocation, the presence test often becomes the centerpiece of planning. Yet the closer connection test is equally critical in determining whether Puerto Rico becomes your true tax home.

To qualify as a bona fide resident of Puerto Rico under IRC Sections 933 and 937—and therefore access Act 60 residency requirements—an individual must also satisfy the tax home test and the closer connection test. Of the three, the closer connection test is frequently the most subjective and, in practice, the most scrutinized.

For those engaged in tax-aware investing, pre-transaction planning, or considering whether to invest in Puerto Rico through a personal relocation, understanding this test is not optional. It determines whether Puerto Rico becomes your true tax home.

I. What Is the Closer Connection Test?

The closer connection test Puerto Rico is a facts-and-circumstances analysis rooted in Treasury regulations under Section 937. Unlike the 183-day rule, there is no bright-line threshold. Instead, the test asks a more fundamental question:

Do you have a stronger connection to Puerto Rico than to any U.S. state or foreign country for the entire taxable year?

The regulations identify nine non-exclusive factors, including:

• Location of your permanent home
• Location of your family
• Where personal belongings are kept
• Where you conduct routine banking
• Civic ties such as driver’s license and voter registration
• Where business activities occur

No single factor controls the outcome. The IRS evaluates the overall pattern.

It is helpful to think of the three residency tests this way:

• Presence Test → Where were you physically located?
• Tax Home Test → Where is your principal place of business?
• Closer Connection Test → Where is your life actually centered?

For high-net-worth individuals relocating, the closer connection test is where lifestyle decisions, family alignment, and financial infrastructure all intersect.

II. The Factors That Matter Most in Practice

Although the regulations list nine factors, experience and case law suggest that some carry greater practical weight.

1. Permanent Home

The location and character of your primary residence often anchor the analysis.

Maintaining a substantial primary residence outside of the island while leasing a modest apartment in Puerto Rico may raise questions. Conversely, purchasing or entering into a long-term lease in Puerto Rico, relocating personal effects, updating insurance policies, and shifting mailing addresses can support a genuine relocation narrative.

The issue is not ownership alone—it is where daily life unfolds.

2. Location of Immediate Family

For married individuals or those with minor children, this factor can be decisive.

If a spouse and children remain outside the island while one spouse satisfies the 183-day rule in Puerto Rico, the IRS may view the mainland residence as the center of family life. Courts have historically given significant weight to family location when assessing residency disputes.

Education decisions, business continuity, and estate planning objectives must be evaluated alongside tax strategy.

3. Civic and Financial Integration

Seemingly administrative actions carry meaningful weight in aggregate:

• Obtaining a Puerto Rico driver’s license
• Registering to vote locally
• Opening Puerto Rico banking relationships
• Updating brokerage and custodial mailing addresses
• Joining local social or professional organizations

The transition should reflect a genuine shift in financial infrastructure—not merely a new mailing address.

Individually, these steps may appear minor. Collectively, they demonstrate whether Puerto Rico is the new center of gravity.

III. Lessons from the Courts: Substance Over Intent

While the closer connection test Puerto Rico applies specifically to territorial residency, courts have interpreted similar residency standards in other contexts in ways that are instructive.

In one notable case involving an airline pilot stationed overseas, the taxpayer argued that he intended to be a foreign resident. He spent years working abroad, developed social ties, and paid local taxes. Yet the court concluded he remained a U.S. resident. Why? His spouse remained in the United States, he maintained a permanent U.S. home, retained his U.S. driver’s license and voter registration, and returned frequently during time off.

The court emphasized a recurring principle:

Intent must be supported by objective evidence.

By contrast, in another case involving a pilot assigned abroad indefinitely, the court found bona fide foreign residency where documentation, limited visits home, and structural relocation supported long-term intent.

For Act 60 applicants, the takeaway is straightforward. The IRS will evaluate:

• Whether your move appears permanent or reversible
• Whether Puerto Rico is your primary residence or a temporary arrangement
• Whether your family, financial life, and daily routines align with your claimed residency

A leased apartment and a calendar strategy are not enough if your broader life remains anchored elsewhere.

IV. Common Risk Areas for Act 60 Applicants

For individuals relocating from Miami or other jurisdictions, certain patterns frequently create risk under the closer connection test.

1. Meeting the 183-Day Rule but Leaving Family Behind

If a spouse and minor children remain in Florida or any place in the continental United States while one spouse spends 183 days in Puerto Rico, the IRS may view the mainland home as the center of family life.

2. Maintaining a Significant U.S. Primary Residence

Retaining a large, fully staffed home in Miami while maintaining a comparatively modest residence in Puerto Rico may undermine the relocation narrative. The analysis often turns on where daily life is meaningfully conducted.

3. Excessive Travel Back to the Mainland

Frequent and extended returns to a former state can weaken the appearance of permanence. Travel patterns should be consistent with a genuine relocation.

4. Incomplete Civic and Financial Transition

Failing to update:

• Driver’s license
• Voter registration
• Banking relationships
• Brokerage mailing addresses
• Insurance policies

can collectively signal that Puerto Rico is not yet the true center of gravity.

5. State Residency Termination Issues

Even if federal residency under Section 933 is established, former states may continue asserting residency for state income tax purposes. Florida does not impose state income tax, but individuals relocating from New York, California, or other high-tax states must formally sever domicile.

V. Strategic Planning Considerations for High-Net-Worth Individuals

The closer connection test should be approached as part of broader structural planning—not as an afterthought.

1. Align Relocation with Family Objectives

Residency decisions should reflect genuine family alignment. Education, estate planning, and lifestyle considerations often carry more weight than the tax benefit alone.

2. Coordinate With Pre-Transaction Planning

For those anticipating a liquidity event, business sale, or major capital gain, relocation must occur well before the transaction. Pre-transaction planning that integrates residency timing, tax-aware investing, and asset structuring is critical.

The closer connection analysis applies for the entire taxable year. Late-year moves may not produce the intended result.

3. Migrate Financial Infrastructure

Transitioning from a wealth management Miami or another continental U.S. framework to a Puerto Rico-centered structure may include:

• Establishing Puerto Rico banking relationships
• Aligning investment accounts and custodians
• Updating advisory agreements
• Reviewing insurance and estate documents

For multi family office private structures or family office management services platforms, this may require coordination across trustees, administrators, and advisors.

4. Ensure Behavioral Consistency

Residency is not only legal—it is behavioral. Travel patterns, community participation, and day-to-day routines should align with the claimed domicile.

In practice, the closer connection test asks whether Puerto Rico has become your operational and personal headquarters.

VI. Conclusion

The closer connection test Puerto Rico ultimately answers a simple but consequential question:

Where is your life centered?

Under Puerto Rico Act 60, satisfying the 183-day rule is necessary—but not sufficient. Bona fide resident status under Section 933 depends on demonstrating that Puerto Rico, not another U.S. state, is the primary locus of your family life, financial activity, and civic integration.

For investors evaluating whether to invest in Puerto Rico through personal relocation, and for family office Puerto Rico structures coordinating cross-jurisdictional planning, the distinction between appearance and substance matters.

Relocation should reflect a consistent, documented, and defensible shift in center of gravity—not merely a tax calendar adjustment.