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DeGen Island Update and Format for City Guides
Level 1 - NGMI
Welcome Avatar! Brain here is back with a quick update on Puerto Rico or DeGen Island USA. While a large chunk of people were taken out by FTX (and CeFi scams), we thought it would be good to provide an update. As many of you know, to qualify for Act 60 you need to live in Puerto Rico for 183 days of the year for three years straight.
While there are other small work arounds to this, that is the simplest explanation. Considering the tax benefits you do not want to mess around unless you want to get into a long legal battle (no one wants that).
Part 1: DeGen Island Tax Set Up and Opinion
Alright fellow cartoons! I’ve disappeared for quite a bit of time on Twitter and the only two questions I really got were how to set up in PR “if it is worth it” and questions around online business in PR.
The second one is a big no in terms of topics since inviting competition is not something intelligent.
“Is it Worth it”: It entirely depends on your personal situation and lifestyle needs. Would not be moving to Puerto Rico if you have three kids at age 10 and expect to spend 365 days a year here on the island.
In the current situation I am in, it was worth it with a resounding yes and no real debate at all. This is a life altering win. Life altering or life changing is not a phrase to be taken lightly.
The one trick here is that you need to survive the full three years. If you don’t have a stable income or consistent capital gains, it can blow up in your face faster than depositing your money into a CeFi yield protocol.
Who Should Go? Get this every week on Twitter. In my opinion there are only two people: 1) you have a business that qualifies for the 4% tax rate and 2) you have capital gains taxes that are constant and will pay significant tax even if the market goes down 30% - example you have $25-100M sitting in stocks that pay dividends that you never plan on selling.
How Does the Math Shake Out: The math is quite simple. You should be able to pay all of your living costs due to tax savings alone. Let me repeat that for people on the fence!
You should be able to pay all of your living costs due to tax savings alone.
If you run the math and find that this is not the case, it does not make a lot of sense for you. The reasoning is rather simple, the “1/3” rule.
If you’re high earning it usually looks like this in the USA 1/3 spent on tax, 1/3 spent on living, 1/3 is invested. In Puerto Rico, if you’re at 4% and 0%, it would look more like this. 1/3 spent on living 2/3 is invested. As you can see the math compounds pretty quickly. If you’re in Puerto Rico with this set up you’re saving 6 years within a 3 year time frame vs. 3 years in a 3 year time frame. This is massive when you add compounding.
How Much Does it Really Cost? A lot more than most think. If you add up the costs there are a lot of stipulations. Unless you’re an ultra rich trader ($25-100M), the real benefit is the 4% tax rate on income. This comes with the following paperwork: 1) you have to donate $10,000 every year, 2) there are about $20,000 of annual filing fees - this includes your accountant and business filing rules, 3) you have to pay yourself a “reasonable salary” which is really going to shake out to $120,000 a year if you’re doing well = $30K in tax and 4) miscellaneous legal fees, operational fees such as cell phones or an office and 5) you do have to buy an apartment while here - within first 2 years.
This means your effective tax rate is going to be in the 8-13% range. This is still massive if you’re coming from New York as your tax would go from around $500K to $100,000 for every $1,000,000 that you earn.
If you’re in that camp you’d be making an absolute killing in Puerto Rico. It means you’d probably save 3-4 years worth per year which means you’d put away say $750,000 a year versus $150,000-250,000 a year in New York. There is no chance you don’t jump socioeconomic classes within three years. Your major risks are business failure and rare catastrophic event. Adding to this, there is no real cap on the earnings! If you earn over $3,000,000 per year you simply have a few thousand dollars of additional filings. Other than that the tax rate remains at 4%. Four percent!
The Worst Way to Do It: Now that the dust has settled, the traders who moved to PR did it entirely wrong. You can’t take that type of risk with a book of $5-10M in net worth since you could be wiped out by a single -33% year.
This is simply poor financial planning and the island was quickly wiped of get rich quick traders. As an important note on this topic, if you do not do your three years you have to pay back taxes!!! This is not a situation you want to be in and helps explain the intense focus on keeping your business running smoothly for at least 3 years. After that you could take a lot more risk since you don’t have any back tax risk that could add up to hundreds of thousands of dollars (or even millions).
Example: Many stories already passed through but here is an example. You try to move to PR with $3M. You go to the island and the market tanks your net worth gets cut in half. Since you don’t want to pay back taxes, you have to buy a place. You plunk down $500,000 on a decent place. Congrats, you’re now sitting on $1,000,000 with $30,000 in annual filing fees and have to survive the next two years. Not going to be easy.
Social Life Items: It takes about 8-9 months to really figure the island out. Would not recommend moving to anything except San Juan or a city near the airport (Guaynabo for example). That should be a clear indication if you’re in a financial position to make the move worth it.
If your plan is to move 2-3 hours away and have no access to a major airport or to any activities (surfing, snorkeling, beach, concerts, bars, restaurants etc.) it just doesn’t make a lot of sense. We’re sure there are some rare exceptions, that said, being close to everything is really the best way to live. Particularly now that a lot of people simply didn’t make it and the island is a lot smaller.
Downsides: There are of course downsides. If you’re moving to an island there are less options vs. a major city on the mainland. Don’t think it is possible to tell someone if they would enjoy living on an island. As mentioned if you live near San Juan (at minimum) it becomes extremely easy once you get settled and travel a bit to break up each month.
Add this cost into your budgeting plan if you make the move.
Cautiously Optimistic: Not going to provide much more personal details but would say the idea of staying for only 3 years is starting to look unlikely. The tax benefits are too large and the health benefits have been massive. If you reduce stress, take advantage of low cost health and wellness items (spas, massages, beach, golf etc.) you can really reap a lot of benefits. Would say around 5 years the “itch” to leave may come. We’ll see how it goes but if all goes well i’m guessing that people will be asking about how this works if we get a bull market sometime over the next four years or so!
Before Signing Off: Many asked about other tax set ups like Dubai. This does not make sense for Americans. It may make sense for people in other countries/nationalities.
The main reason the billionaires are here is because it is the cleanest set up. Hard to argue against clearly written law. Some will say you should set up a bunch of shell companies and this is simply juggling knives and fire at the same time.
You end up fighting the actual government, you deal with legal issues and you could quite easily be hit with tax evasion and other federal crimes. PR is the cleanest way to earn your money since the law is quite simple.
Considering you’re getting such a massive tax benefit it would be wise to avoid picking fights with people who are bigger than you. You don’t want to go to court with a Jury who knows you’ve been paying nearly no tax while everyone on the jury is paying 33%, while you make multiples on them! Think it through anon.
Conclusion: That’s really it from me, if you have questions i’ll be on Twitter at the end of this week to answer them publicly (Friday-Saturday). For now it’s best to focus on making money until that three year marker is cleared. You don’t risk life changing money for Tweet clout that is for sure!
Part 2: City Guides - BTB
Making a small adjustment here. We’re going to start building out the city guides when Instagram hits around 10,000 followers. Right now we’re getting a significant amount of traffic from it. So. We may as well go forward with the guides.
IG Setup: As announced months ago we have a new content strategy there which is really simple: 1) art analysis, 2) travel, 3) a Reel and 4) random lifestyle Q&A. That’s going to be the posting pattern at all times. Much easier to check once a day and move on.
City Guides: You saw the quick San Francisco Overview Here. The city guides on the paid stack will be a bit different. It’ll run as the following format: 1) short story similar to the SF example, 2) some activity recommendations and 3) a short summary on what the city is best for.
Keep in mind that these are written under the assumption that you are a single male. In the short summary position… we will add opinions on if it is better for families, single people etc. Those are once again, opinions.
Quick US Answers: Not sure why our IG gets the same redundant questions. That said, laid out in english again… current top two cities: Dallas and Miami. Next assumes you are rich and already have money: New York City, Los Angeles and San Diego. That is basically it. There is no way we’re changing this opinion any time soon.
Before the people who say Houston or Austin are better… you have a feel for the vibe we think is best. Houston is just too spread out (need a car and drive all day) and Austin has basically turned into a slowly declining version of SF.
PDF Format: The City guides will be in simple pdf format on the paid stack. We realize people will steal but we will purposely leave some small items out for questions to keep the grifters out. If someone can’t afford $8.33 a month we really doubt they are going to succeed in NYC anyway. Being unable to afford a coffee date is a sure fire way to get zero’d in the dating market in any of the cities we just mentioned.
International: The international cities will be based on shorter duration stays. Assume under a month. This will bias the PDFs towards people who don’t live there on a day to day basis. As an example, NYC is even better if you’re able to live there only in spring/summer. Remember this when reading through the various international cities from West Europe to Asia to South America.
On that note, in a homage to MPM, “the rest is up to you”
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are *opinions* written by an anonymous group of Ex-Wall Street Tech Bankers and software engineers who moved into affiliate marketing and e-commerce. We’re an advisor for Synapse Protocol 2022-2024E.
2017-2020 Old Books: Are available by clicking here for paid subs. Don’t support scammers selling our old stuff
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Social Media: Check out our Instagram in case we get banned for lifestyle type stuff. Twitter will be for money. At 10,000+ instagram follows we will publish some city guides ranking each region we’ve been to.