USA - NEW YORK Law and Practice Contributed by: Adam S. Walters, Erin C. Borek, Timothy P. Moriarty and Kelly E. Marks, Phillips Lytle LLP
eight months after the completion of the contract or the final furnishing of labour or materials. For single-family dwellings, a mechanic’s lien must be filed within four months of completion of the contract or the final furnishing of labour or mate - rials. If the work performed requires a license, the claimant must be licensed in order to file a mechanic’s lien. The lien must be recorded in the county in which the project is physically located, and the lien is valid for one year from the date of filing, at which point the claimant must either commence an action to foreclose the lien or file to extend the lien by one year. Pre-existing mortgages typically have priority over a mechanic’s lien claim, but a mechanic’s lien has priority over advances made by the construction loan lender after the filing of the mechanic’s lien. The owner can discharge a mechanic’s lien by depositing with the county clerk a payment equal to the amount claimed in the lien, with interest to the time of the deposit, or by posting a bond equal to 110% of the lien. 7.7 Requirements Before Use or Inhabitation An owner must obtain a certificate of occupan - cy stating a legal use and/or type of permitted occupancy of a building before a building may be occupied. A certificate of occupancy has no expiration date.
selected services. Sales tax does not apply to the sale or purchase of real estate. 8.2 Mitigation of Tax Liability Parties occasionally use a Consolidation Exten - sion and Modification Agreement to reduce mortgage recording tax. Provided both the exist - ing lender and the new lender agree, the existing lender assigns its mortgage to the new lender, which will then amend the terms of the mort - gage for refinance or purchase of the property. A buyer will then pay mortgage tax on the dif - ference between the outstanding balance of the seller’s existing mortgage and the buyer’s new mortgage, rather than paying tax on the entire amount of the new mortgage. 8.3 Municipal Taxes In Upstate New York, municipal taxes are typi - cally not paid on the occupation of business premises or on the payment of rent. 8.4 Income Tax Withholding for Foreign Investors Foreign investors are generally subject to a 30% withholding tax on certain US source income, including real property rental income. In certain cases, an income tax treaty may reduce the withholding tax rate. The Foreign Investment in Real Property Tax Act requires the purchaser of real property owned by a foreign investor to withhold a 15% tax on the total amount realised on the purchase. Foreign investors in partnerships are subject to a 15% withholding tax on the sale of their partnership interests. Because real estate in the USA is fre - quently owned through entities treated as part - nerships for US federal income tax purposes, foreign investors will have exposure to this tax if they dispose of the equity in a partnership own - ing real estate.
8. Tax 8.1 VAT and Sales Tax
New York State does not have a value added tax. New York State sales tax only applies to the sale or lease of tangible personal property and
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