There are a wide range of deductions available for most real estate investments.  Investors will often seek to purchase properties because of tax benefits available to the owner. Eligible income tax deductions for all properties include things like mortgage interest paid and property taxes.  Even more deductions such as maintenance expenses and hazard insurance premiums are available on investment properties.

 The obvious goal here is to protect as much of your income from taxes as possible. Knowing the available tax deductions can turn a good property investment into a great one. An informed investor can be very effective at doing this. Let's look at some of the most popular tax deductions for real estate owners in a little more detail.

One income tax deduction is mortgage interest.  Any mortgage interest paid during the course of the year can be deducted from your taxable income for that year. For example, a $100,000 mortgage at 8% interest will yield an interest deduction of $8,000 during the first year of the loan. This would allow you to deduct $8,000 from your taxable income if you itemize your deductions. The deduction for mortgage interest paid is the same for all properties you might own, whether investments or otherwise.

Property Taxes are another deduction available to both investors and homeowners alike. Property Tax Assessments are a popular method of funding for local governments, whether City or County.  Any property taxes that you pay can also be deducted from your taxable income if you itemize. This deduction is available to any property owner.  The more property taxes you pay, the more tax savings you will get.

Some income tax shelters are available to the investor only.  One such tax deduction opportunity is insurance premiums.  Insurance premiums for coverage of real estate investments are also deductible from your taxable income if you itemize. However, this deduction is available only to investment property owners.  Insurance premiums are not deductible for homeowners.

Monies spent on property maintenance for an investment property are also an eligible deduction from your taxable income. Example of eligible property maintenance deductions include expenses you might incur for "repairing" a leaking roof, broken furnace, cracked foundation. Maintenance costs can be quite substantial, especially for older properties or for some rental properties. This deduction is not available to homeowners, but can be very important benefit of owning investment real estate.  "Improvements" that prolong the life of your property or increase its value are treated differently from maintenance costs. These costs not tax deductible.

 Another potential tax shelter for the investor is Depreciation.  Depreciation accounts for the decline in value of your property over time, including most real estate.  A reduction in value from depreciation can be deducted from your taxable income. However, it does not necessarily affect the market value of the property. Investors generally try to obtain maximum tax benefits by depreciating real estate as quickly as possible. Rapid depreciation provides the deduction to taxable income sooner. Current law states that residential rental properties must be depreciated equally over twenty-seven and one-half years, while commercial investment property must be depreciated over thirty-nine years.

Be sure to itemize your deductions when preparing your income tax return to take full advantage of all these few simple deductions.  Knowing these key tax deductions "shelter" will help you maximize the return on your investments and minimize your tax burden.