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My grandfather recently passes away and left his home to my uncle. My uncle does not want the home and has decided to sell it to me. He never occupied the home. We are trying to get an FHA loan, but it states:

“A family member purchases another family member’s home as a principal residence. If the property is sold from one family member to another and is the seller’s investment property, the maximum mortgage is the lesser of
•85% of the appraised value….

The part I am wondering about is would this property be considered my uncle’s investment property, although he never purchased it with the intent to profit? It was inherited by him.

7 Thoughts on Is inherited proprty considered investment property?
  1. Reply
    Pascal the Gambler
    February 8, 2014 at 2:52 pm

    Probably not.

  2. Reply
    I know nothing
    February 8, 2014 at 3:09 pm

    it was not obtained to be an investment but rather by inheritance, so it is not an investment property – would be my opinion and I’ve worked in the legal field for many years (not an atty though)
    but you should probably call the FHA and ask them…

  3. Reply
    Claudia
    February 8, 2014 at 3:33 pm

    No, it states ….. IF the property is sold from one family member to another and is the sellers investment… IF… this is the key… they are saying IF, not that it is. In other words they are explaining the process IF this were to the case, not that it is the case.

  4. Reply
    tro
    February 8, 2014 at 3:38 pm

    since it was never his residence and he is willing to sell it it would appear to be investment property altho he didn’t invest a dime

  5. Reply
    Anonymous
    February 8, 2014 at 3:54 pm

    You need to talk to your lender. It’s a gray area in my mind, but I’m sure that FHA has an official opinion on the matter.

    If he inherited and did nothing with it other than sell it, a strong argument can be made that it was NOT an investment.

    If, on the otherhand, he inherited and then rented it out or otherwise used it for commercial purposes, his actions make is seem like an investment. An investment property is one that is owned with the primary intention of making a profit(as opposed to a residence or for personal use). Even if he didn’t buy it, if he continued to own it with the primary purpose being profit, it starts to look like an investment.

  6. Reply
    G-Man
    February 8, 2014 at 4:16 pm

    I know people that buy cars and call it an “investment”

    An investment makes money, a debt just costs money.

  7. Reply
    Lesus
    February 8, 2014 at 4:38 pm

    If it was your grandfather’s home and your uncle inherited it, it was never an investment.

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