Second Home or Investment Property? It's both, but...

[Jacqueline Brown]

I know there's reason for hesitancy when renting to family, but hear me out. There are some decent priced properties that allow me to make the numbers work back in my hometown. I am looking to purchase a property and allow my mother to rent it from me, yet it will also be a second home for when I visit (which is fairly frequently). I have two questions: From a loan standpoint, what is the better option? An investment property or second home?

My next question is from a tax standpoint....which one is more beneficial for tax purposes or is there a "right" way when it comes to this situation? Are there differences in insurance prices as well? Any insight would be appreciated. The best option that makes my money work for me is the ideal option of course, but I want to make sure my choices are legal and lessen my chances of being audited. Thanks!