How does an investment property differ from a primary residence?

An investment property is specifically acquired for the purpose of generating rental income or appreciation in value, which makes it fundamentally different from a primary residence. A primary residence is a place where an individual or family lives and does not typically generate income; it serves as a personal dwelling rather than an investment. In contrast, investment properties may be residential, commercial, or other types, and their primary aim is to provide a return on investment through rental payments or increases in property value over time. This distinction highlights the economic motivations behind the purchase, with investment properties being strategically selected to enhance financial returns rather than serve solely as a living space.