USA - FLORIDA Law and Practice Contributed by: Jeffrey R Margolis, Marc S Shuster, James L Berger and Evan Rosenberg, Berger Singerman LLP
payment in exchange for the shareholder’s equi - ty interest in the distributing corporation. Takeaway, planning implications The selection of the proper legal entities through which to own and operate US real property is fact intensive. As a guiding principle, the partnership structure frequently remains more favourable in the closely held setting if the business exigen - cies and investment requirements will accom - modate the use of LLCs, limited partnerships and other legal entities. State Transfer and Related Tax Considerations Transaction-related taxes Florida imposes several primary transfer-based or collateral-based taxes with respect to real prop - erty transactions, each of which generally applies to both corporate and individual taxpayers. Successor liability for taxes Florida statutory law makes a purchaser of more than 50% of a business or the assets of a busi - ness jointly liable for certain unpaid taxes of the seller, including sales and use taxes. Certain pre-sale considerations: federal transfer taxes The predicate for this discussion – the owner - ship of US real property through the corporate form – calls attention to choice-of-legal-entity considerations within the context of overall US tax and estate planning. In establishing and perpetuating an organisational structure for the ownership of US real property in the closely held setting, US federal transfer taxes pose material, potential liability and add another layer to the analysis. This exposure is especially acute in the US-inbound setting.
The USA imposes a transfer tax system that consists of a gift tax, an estate tax and a gener -
ation-skipping transfer tax (GST). 8.2 Mitigation of Tax Liability
In a conveyance of real property transaction, documentary stamp tax may be avoided if the transaction is structured as the transfer of 100% of the equity ownership interests of the grantor to the grantee in lieu of a transfer of the real property. However, in 2009, the Florida legis - lature amended Section 201.02, Florida Stat - utes, which resulted in the documentary stamp taxes being due and payable in connection with certain indirect transfers and transfers without change of beneficial ownership. As amended, Florida law imposes documentary stamp tax on so much of the consideration that is paid on the sale of interests in a “conduit entity” as is attrib - utable to the value of any Florida real property that was transferred to the conduit entity within the preceding three-year period. In a mortgage loan refinance transaction, an existing borrower that is seeking to refinance an existing mortgage loan may save on the docu - mentary stamp taxes and intangible taxes pay - able with respect to the new mortgage loan if the new lender obtains an assignment of the existing mortgage loan from the existing lender rather than paying off the existing mortgage loan and providing a new mortgage loan. 8.3 Municipal Taxes Florida levies a sales tax on commercial rental, as well as a sales tax (transient rental tax) on guest accommodations and residential leases of six months or less. The baseline rate is 6%, subject to increase by local surtax. With respect to related party or inter-company leases, it is possible in appropriate fact patterns
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