Primary residence, second home or investment: does it change how you buy a Miami condo?

Yes, in five places, and the answer has to be the same in all of them. A lender prices a primary residence, a second home and an investment property differently and asks the buyer to swear to the one chosen. Florida's homestead exemption and its cap go only to a primary residence, so a second home pays full freight. An insurer writes a seasonal or empty home on different terms from a lived-in one. The association's rules decide what an investor may do with the home, by the week, the month or not at all. And the name on the deed follows the use: a person or a revocable trust for the home the family lives in, a company more often for the one that earns. A buyer who answers "second home" to the lender, "primary" to the property appraiser and "rental" to the association has three problems. This page sets out what each answer does and the questions to settle with counsel before the contract names the buyer.

It sets the programme. An owner-occupied loan carries the lowest down payment and rate because the borrower lives in the collateral; a second-home loan requires the home to be for the borrower's own use for part of the year and not a rental business, at a somewhat larger down payment; an investment loan is priced on the rent and the risk, with the largest down payment and the highest rate, and some investor lenders underwrite the property's income rather than the borrower's. The borrower signs an occupancy affidavit at closing, and moving in late or renting a home sworn as a primary residence can be a default under the note. On a pre-construction purchase the loan is arranged near delivery, so the use the buyer intends at contract and the use at closing have to agree, two or three years apart. Read cash or mortgage for a Miami pre-construction condo, can a new Miami condo building fail the lender's review for the building's side of the review, and foreign national financing.

It grants or refuses the homestead. A primary residence lived in as of January 1 and applied for by March 1 gets the homestead exemption and, from the next year, the Save Our Homes cap on how fast the assessment can rise. A second home and an investment property get neither: the assessment resets to the sale price in the first full year after closing and then follows the market. A buyer with two Florida homes chooses one; a married couple generally has one homestead between them. A revocable trust can hold a homestead where the beneficiary has the right to live there; a company cannot. The use the buyer declares to the appraiser is checked against licences, voter registration and where the household actually sleeps. Read does buying a Miami condo make you a Florida resident, why property tax resets when you buy a Miami condo and moving from New York to Miami: domicile.

It writes a different policy. The association's master policy covers the structure in every case; the owner's own policy covers the interior, contents and loss assessment, and its terms change with the use. A primary residence is the standard form. A seasonal or secondary home is written with the insurer knowing it stands empty for months, and many policies carry conditions about vacancy, about who checks the home and about the water being shut off, which an owner who does not read them discovers at the claim. A rented home is written as a landlord's policy, with the tenant carrying their own contents cover. Flood cover on the contents is separate again. The buyer tells the insurer the truth about the use and the months, because the condition that was not disclosed is the one that is not covered. Read Miami condo insurance, what is a named storm deductible and who pays it in a Miami condo and owning from abroad and property management.

It applies the rules, which are the same for everyone and bite hardest on the investor. The declaration and the house rules say the minimum lease term, how many times a year a home may be let, whether the association approves tenants and in how long, whether short-term rental is allowed at all, and what a guest staying without the owner has to do. On our file NoMad Residences Wynwood publishes short-term rental as allowed; most declarations set a minimum lease term and an approval process; a hotel residence may offer a rental programme through the operator on the operator's terms. An investor reads those clauses before the reservation, because a building that does not allow the use cannot be made to, and a second-home owner reads them too, because the rules on guests and on lending the home to family are the same clauses. Read Miami short-term rental rules, buying a condo in Miami to rent out, who can live in your Miami condo besides you and short-term rental rules at NoMad.

It matches the name to the use. A primary residence is usually held by the people who live in it or by a revocable trust, so the homestead and the creditor protection Florida gives a married couple stay intact. A second home is often the same, unless the buyer is a non-resident, where the US estate tax exposure pushes some families toward a structure. An investment property is more often held in a company, which has consequences for the loan, the insurance and the tax return that counsel and the buyer's adviser set out before the contract, because the developer's consent is needed to change the name afterwards. The rest is the buyer's tax position at home and in the United States: what a second home's costs do and do not do on a return, how rental income is taxed and reported, and what a sale within a few years does, all of which belong to an adviser and none of which a sales gallery answers. Read LLC, trust or personal name, buying a Miami condo as a second home, estate tax exposure for non-resident owners and can you buy a Miami condo with a 1031 exchange.

It can, and each of the five has a procedure. A second home that becomes the primary residence files for homestead the next January and tells the lender and the insurer. A primary residence that becomes a rental tells the lender, whose note may require a period of occupancy first, replaces the owner's policy with a landlord's, loses the homestead from the next January, and applies the association's approval process to the tenant. A home moved into a company after closing is a transfer with its own tax, title and lender consequences that counsel reads first. What does not work is changing the facts without changing the paperwork. Read what it costs to own a condo in Miami each year, the first year of owning a Miami condo and from offer to recording when a trust buys pre-construction. The desk reads the rental and guest clauses of each building and the deposit schedule with the buyer before the reservation, and introduces the lenders who write each programme.