Profile picture for Aiyaree

Can we move into our investment property and rent our primary?

Our payment on the investment property is 2300 and we rent it for 1600.  If we rented out our primary for 2500(payment is 2000) and moved into our rental we would have ssome breathing room.  Would it be possible to refinace the rental as our primary if we have only lived in it for a few months? With falling home values the rental may not appraise for the current mortgage. Primary loan 297,000 appraised 2009 for 550,000 .  investment property loan 267,000 may appraise for 250,000

  • August 03 2010 - Winter Park
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Answers (4)

Profile picture for Metro City Realty
Hi Aiyaree, I have done the exact same thing before.  You can move into whatever property you wish and claim it as primary under most circuimstances.  Timing does play a role here with regard to filing for homestead (primary residence tax credit). It is very important that you also inform the tax collector's office for your county of this change too.  Move your homestead to your new primary and DROP the homestead on your old primary.  When you mentioned refinancing your new primary (old rental dwelling), you did not mention if you are going to be asking the lender for a reduction in principal, or if you are plannning to "come to the table" with the funds to absorb the difference between market value and appraised value.  You will also have to take into account that you may need to come out of pocket with the difference between the loan amount the bank is willing to loan on and the market value of your home.  For example, If you estimate your new primary to be worth $250,000 and you find a lender to give you an 80% loan, you will need to come up with an additonal 20% to get the loan. There are certain tax advantages on the rental dwelling and you should consult your accountant about how this will affect your specific situation.  You may get better tax benefits staying put because of the deductions you may be eligible for on the rental dwelling versus a primary residence. Lots to think about.  Dont forget to consult legal cousel and your accountant involved. Good luck.
  • August 04 2010
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I may be wrong, but I feel no lender is going to consider a loan modification on a distressed investment property, turned into a owner-occupied, without you first paying down the loan amount to be within normal guidelines.

Happy funding, Rudi
  • August 04 2010
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Profile picture for broker_GRI

Aiyaree,

Please do speak with your tax consultant as well.

There could be taxable consequences to doing that.

I'm not saying whether they will be good or bad,

(as that is beyond my scope as an agent)

just that you should have all the information when making the decision.

Best of luck,

Tanya

  • August 03 2010
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There are a number of factors to consider to determine Primary Residence; address on Drivers License, voter registration, of course where you actually live it the truest test. 

If your current rental truely becomes your primary, you are entitled to refinance using PR rates.  Good Luck

  • August 03 2010
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