You don't have to be a first time home buyer to qualify here. The down payment is tied up regardless of whether you buy or flip.
No, of course not, but the likelihood of the scenario you're describing occurring under the name of someone who has already owned or owns property is even smaller. There's many, many more practical and straight forward ways of investing in real-estate than trying to game the system with Vivid.
Under a traditional purchase situation you can assign your unit at any time and you can list the home the moment you take possession. That gives the mom and dad in your scenario at least some opportunity for liquidity, and a maximum of a three year hold versus a five year hold plus another $50k in carrying costs.
Now you can assign your unit at Vivid, but it must be to an individual who qualifies under the Vivid qualification requirements and your assignment must be for the sale value you paid.
The latter part about the first time home buyer credit doesnt come into play for units worth over 500k market value.
Yes, that's right. The first-time credit only applies to $500k and partially applies between $500k and $525k.
And as I also recently found out, if the property is over a half-hectare you qualify for a partial credit.