Deducting depreciation and property management expenses in addition to any capital loss from your federal tax return is sometimes overlooked by rental property owners.

"The cost of the building and also any improvements you make can be deducted as depreciation over 27.5 years," Patrick Harper, CPA, wrote in the Orange County Register. "This is a great tax benefit because it is a non-cash item, so you get a deduction even though you are not paying cash in the current year."

Deductible expenses like repairs, maintenance, property taxes and mortgage interest are computed by most owners familiar with tax law. However, Harper advises including fees related to property management, which would include credit checks for potential renters, advertising costs, and related marketing expenses.

Property owners may not pay attention to the smaller expenses they accrue. However, over time, these costs could become substantial, especially when related to on-site visits from absentee landlords.

"For example, if you travel to visit the property from time to time, you can deduct the mileage and any other related travel expenses," Harper says.