Look up Act 20 and Act 22.

It’s not just “take a vacation in PR for 183 days”. You have hoops to jump through and need to actually move there. I think cap gains rate becomes 4% on the PR part, with some amount of apportioning between PR and prior gains.

What kind of hoops? If you're going to do a single transaction for $500k+ that is a huge difference...

Seriously, read up on Act 20 and 22 (whichever applies). Don’t take random 2-minute internet blurbs on it. You enter into a contract with Puerto Rico, you move there, you make required donations, comply with the other rules as required.

Set aside several evenings to do the basic reading, then if still interested, engage in a PR-based expert counsel to ensure you both understand and that you do everything correctly.

For me, it would only make sense if the amount in question was mid 7 figures if you’re just doing it for taxes and didn’t otherwise want to live in PR.

You pay 0 federal income tax on income in Puerto Rico. That is, when the income is in Puerto Rico, not when you are in Puerto Rico. Capitol gains income happens where the capitol gains happen, not where you live. Even though you moved to Puerto Rico you would still have to pay capital gains tax on your capital gains in the non-territorial US. But if you had capital gains on Puerto Rican assets like Puerto Rico government bonds or you sold a stake in a Puerto Rican company in a transaction that took place in Puerto Rico, then you wouldn't have to pay tax on those gains.

If you can arrange for your capital gains elsewhere to look like income in Puerto Rico though, then you're all set.

What do you mean "when the capital gains" happens? Say I was an early employee of a company and received stock options. I exercised my options while living within the US and have private stock. The company IPOs, I move to Puerto Rico, and sell my shares while a resident there.

The "tax event" happens when I sell my shares, no?

It's not 0, it's 4% and you need to jump through some hoops to do it, but basically yes. You need to get it reclassified from capital gains to consulting/contractor income.

I know multiple people who've moved to PR for tax purposes.

Ok, 4% is still very low.

Even with a few hoops that I assume are manageable if others are doing it, it seems way too good to be true. I would seriously consider moving if I lined up a bunch of capital gains to liquidate in a single year.

If it's relevant, shell out a couple grand to a competent tax lawyer and make sure you know what you're doing.