Now may be an excellent time for you to decide to make an investment in rental property or become involved with property management. Despite a bit of a weakening for the local markets, there are so many significant tax benefits that can make it a very good time. If you are a homeowner then you may be familiar with many of the possible tax benefits available. For example, you may already know that when you purchase a home with a mortgage loan, you can deduct the interest that you are required to pay on the mortgage from your income taxes.

You can also tap into other tax benefits that you may not be familiar with. Many of the maintenance and repair costs will be deductible, as well as many of the utility and insurance costs. If you choose to hire a real estate agent to manage your tenants or a property manager, you can usually write off any fees associated with those services as well.

Deductions for depreciation will also commonly be a big write off. Depreciation provides you with a tax vehicle to deduct perhaps the largest expense that is associated with property ownership—the actual price of the property. Understand that depreciation does take place over an extended period of time. For example, residential property depreciates over a period of 27 ½ years and commercial property will depreciate for 39 years. A rental property that costs you $150,000 will depreciate at a rate of approximately $5,000 per year.

Improvements that you make to your rental property can also often be deducted. However, these deductions come in the form of depreciation, rather than direct deductions. The improvements affect your cost basis. Repairs, on the other hand, usually can be deducted in the tax year that they were made. If you are not sure if something qualifies as a repair or an improvement, then understand that a repair is something that keeps the property in good condition, while an improvement is something that will add value to the property.

Landlords cannot deduct the value of their own labor, but they can deduct travel related to making repairs or improvements. These costs can include mileage, airfare, hotel costs and some meal expenses.

If you operate a home office that allows you to manage your property, then you can deduct certain expenses related to that, including a portion of your homeowner’s insurance, utilities and your own mortgage costs. Home office deductions have specific qualifications, and the space must be dedicated for business use only.