When considering temporary residence in a multi-rental property, scrutinize local residency laws, disclose plans to lenders, and understand tax implications. Confirm zoning compliance, seek advice from real estate, tax, and mortgage professionals for comprehensive guidance on legal and financial aspects.
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“If I buy a multi-rental property as my first home, but my family lives in both. (Ours is a big family). Is it ok? Any legal issues? My plan is to buy a multi-rental now, live there for 3 to 4 years, then buy a nice home for myself and keep this as an investment property (two rentals). Advice, please.”
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Residency and Legal Considerations:
Before purchasing a multi-rental property with the intention of residing there temporarily, carefully review local residency requirements. Some jurisdictions may mandate a specific duration for a property to be considered a primary residence. Failure to comply with these regulations could lead to legal consequences. Ensure you understand and adhere to the local laws to avoid complications.
Mortgage and Financial Implications:
When obtaining a mortgage for the property, openly communicate your plans with the lender. Mortgage agreements may contain clauses specifying that the property must serve as your primary residence. Failing to disclose your intentions could result in issues with the lender. Additionally, be aware of the tax implications associated with converting the property from a primary residence to an investment property in the future, as this shift may impact your financial obligations.
Local Zoning and Property Usage:
Check local zoning laws to confirm the property’s eligibility for use as a multi-rental unit. Some areas may have restrictions on the number of rental units or the conversion of properties into investment assets. Understanding these regulations ensures that your plans align with local guidelines and helps you avoid potential legal conflicts down the line.
Professional Guidance:
Seek advice from professionals in real estate law, taxation, and mortgage lending within your local area. A real estate attorney can provide insights into local regulations, ensuring compliance with residency requirements and zoning laws. A tax professional can help you navigate the financial implications, and a mortgage advisor can guide you on the lender’s perspective and potential hurdles related to financing. Their expertise will provide a comprehensive understanding of the legal, financial, and logistical aspects of your plan to live temporarily in a multi-rental property before transitioning it into an investment.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
