What is considered investment property?

Investment property refers specifically to real estate that is purchased for the purpose of generating income or appreciating in value. This can include residential properties that are rented out to tenants, as well as other types of properties that may yield returns either through rental income or by increasing in market value over time.

The focus on generating income or appreciation is key in defining investment property. Properties used solely for personal enjoyment, such as a primary residence or vacation homes, do not fall under this category because they do not provide a return on investment in a way that investment properties do.

While commercial property is indeed a type of real estate, it may not always be classified strictly as investment property if it is for business operations rather than for investment purposes. The distinction lies in the owner's intent—if the property is purchased primarily to generate income, it qualifies as investment property.

In summary, the correct answer highlights the fundamental concept of investment property being utilized for income generation or as a long-term appreciation asset, differentiating it clearly from other types of properties such as personal residences or vacation homes.