John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.

Ten wealthy Americans have already taken advantage of the year-old Puerto Rican law that lets new residents pay no local or U.S. federal taxes on capital gains, according to Alberto Baco Bague, Secretary of Economic Development and Commerce of Puerto Rico. The marginal tax rate for affluent New Yorkers can exceed 50 percent.

Paulson, 57, recently looked at real estate in the exclusive Condado neighborhood of San Juan, where an 8,379- square-foot penthouse, complete with six underground parking spaces, lists for $5 million. The area is home to St. John’s School, a private English-language academy where he and his wife could send their two children, said the people, who asked not to be named because the discussions were private.

Paulson’s firm declined to comment on his personal plans.

“While we have looked at real estate investments in Puerto Rico, we have not made any investments,” Paulson & Co., which oversees $18 billion, said in a statement. The firm is one of the largest holders of Popular Inc., which owns the biggest lender in Puerto Rico, and it runs a $300 million real estate fund that has properties in Florida, Nevada, Arizona, California, Colorado and Hawaii.

Unusual Choice

John Paulson hasn’t decided whether to move and may opt to stay in New York, the people said. His firm would remain in New York.

Wealthy individuals in the U.S. and Europe are relocating as governments raise taxes on top earners to shrink budget deficits that have become unsustainable after the 2007-2009 financial crisis. Actor Gerard Depardieu left France last year for Belgium and billionaire Bernard Arnault, who runs LVMH Moet Hennessy Louis Vuitton SA, applied for Belgian nationality, after President Francois Hollande sought to introduce a 75 percent tax on millionaires.

BlueCrest Capital Management Ltd. and Brevan Howard Asset Management LLP opened or expanded offices in Switzerland in the past three years after Britain raised taxes on the wealthy.

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