My wife and I were thinking about purchasing a condo in the city where our daughter lives, especially since interest rates are so low right now. She would be living in it full time until we retired, paying us rent towards the mortgage. Is it better to have this property as a 'second home' or as 'investment property'? Are there tax benefits to either that would outweigh the other?
There definitely are tax differences. However, since I'm an investment advisor not a tax advisor, you should discuss this with a qualified, experienced tax professional. Also, think about this from every angle. There are always risks that come along with any potential reward. And, if you own rental property, you're a landlord. This comes with its own set of issues. As does renting to family members.