USA - FLORIDA Law and Practice Contributed by: Jeffrey R Margolis, Marc S Shuster, James L Berger and Evan Rosenberg, Berger Singerman LLP
7.6 Liens or Encumbrances in the Event of Non-payment Prior to construction, the owner and the owner’s construction lender typically require the mortgage securing the mortgage loan to be recorded in the public records prior to the recordation of a notice of commencement. A notice of commencement is a two-page form that is recorded in the public records of the county in which the real property is located and is posted at the job site. 7.7 Requirements Before Use or Inhabitation Occupancy of improved real property is a local law issue that is determined by the Florida Building Code or other applicable county and municipal laws, rules, codes and regulations. Typically, a municipality requires the issuance of a certificate of occupancy or certificate of com - pletion (that the structure is complete, such as a building, but does not grant occupancy) before a building or structure that has been constructed upon real property may be occupied. A tempo - rary certificate of occupancy may also be issued, which permits temporary occupancy until cer - tain conditions are satisfied. Several primary federal and Florida tax consider - ations are inherent in addressing a corporation’s transfer of real property situated in the USA, as described below. A “corporation” for this purpose includes both a state law corporation (a legal entity formed under a state’s corporate statutes) and any entity classified as a corporation for US tax purposes. The category may also include certain non-US 8. Tax 8.1 VAT and Sales Tax
entities which, under US tax law, have a corpo - rate classification as the default status. Income Taxes A corporation is generally subject to income tax at the entity level with respect to all income and gains, including gain realised on the sale of real property situated in the USA. Additionally, depending on the ownership of the corporation and other factors, a second tier of income or withholding tax may apply with respect to the distribution or application of the corporation’s retained earnings attributable to the sale. Federal and Florida income taxes apply at the corporate level, including with respect to net tax - able gains realised by a corporation on the sale or disposition of real property. The federal corpo - rate income tax applies at a top marginal rate of 21% (recently reduced from 35%, as described below), and the Florida corporate income tax applies at a 5.5% rate. Liquidating distributions Corporate and partnership structures pose sig - nificantly different US income tax results in con - nection with the sale of real property. Notably, a corporation (again, a C-corporation) is not eli - gible for a rate preference with respect to long- term capital gains. Standard federal and Florida corporate income tax rates apply to gains real - ised by a corporation on the sale of real property. Only individual taxpayers and certain trusts are potentially eligible for the favourable long-term capital gains rate. Liquidating distributions by a corporation that result in a redemption of a US person’s equi - ty interest in domestic corporation for federal income tax purposes are generally treated as
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