First Time Investment Implications

Hello all,

I am exploring the option of going in 50/50 on a property with some family members in Florida. I currently live in Colorado and do not own any property. I am working to figure out how the lending process will work if I go in 50/50 with another party and also figure out the implications of owning a property in Florida that is not my primary residence. Am I considered a first time home buyer for that house or is it purely an investment? Also, will I lose any benefits when I go to purchase my first home to actually live in here in Colorado (first time home buyer incentives or primary resident incentives)? Could I still be considered a first time home buyer if the house in Florida is just an investment? Would it make sense to form an LLC for the investment property so that it is considered a business? Therefore I may be able to personally still qualify for first time home buyer incentives?

There are a lot of questions, I am just trying to figure out how this all would work and the best way to go about it to make the best decision. Who would I speak to about these topics, a lender or real estate agent?

Thank you!

I am working to figure out how the lending process will work if I go in 50/50 with another party and also figure out the implications of owning a property in Florida that is not my primary residence. Am I considered a first time home buyer for that house or is it purely an investment?

Some on this board will contribute their opinion on the real estate market in FL and the lending process. The property in FL will be an investment property and not your primary residence. First time home buyer status refers to a property you are purchasing for your primary residence. If you decide to purchase an interest in this FL investment property, you can still be a first time home buyer anywhere in the counrty if you don’t already own your primary residence, or have not owned one in the past three years.

Also, will I lose any benefits when I go to purchase my first home to actually live in here in Colorado (first time home buyer incentives or primary resident incentives)?

If you are referring to the FHA first time home buyer loan programs and to the federal income tax credit for first time home buyers if you buy before June 2009, then yes, you are still eligible for these incentives. These are available to you no matter where in the country you choose to live, and are not restricted to Colorado. They do not apply to an investment property purchase.

Would it make sense to form an LLC for the investment property so that it is considered a business?

An investment property can be a business even without an LLC.

There is no one size fits all answer to this question. What makes sense for your situation should be determined in consultation with your tax advisor, your CPA, your estate planner, and your attorney. Where the LLC is formed and how the LLC is to be treated for tax purposes should also be considered.

Since you will have partners in this venture, you should have your own attorney to advise you. You need your own attorney to review the partnership agreement and/or the LLC operating agreement to ensure that your interests are protected,

Lenders and real estate agents are not qualified to give you legal and tax advice.