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What tax benefits are there from buying your own home? Whether you look forward to owning your home 30 years from now, are a traveling real estate hotshot or have paid off your mortgage in record time, one thing is for sure: you can save on your taxes! Buying a home is a great investment from a real estate point of view and also considering the number of tax advantages you can enjoy.

Savings On Mortgage Interest

One of the biggest advantages to owning your own home is that the interest that you pay on your mortgage is tax deductible, at least up to a limit of one million dollars. Like all other tax breaks for homeowners, this deduction can apply to any kind of home, even a second home as long as you live their 14 days out of the year, or 10% of living time to renting time. You can also deduct the interest of other debts that use your home property as security. Keep in mind though, that the amount you can deduct might be limited if the borrowed amount raises your debt above the home's market value. Can this happen? Yes, for example, if a lender were to extend you a large loan based on more than just the property value. You are also allowed to deduct any amount that you pay for points you use to reduce the interest rate of the loan (or another loan connected to the property). Usually, the points on a mortgage to buy or renovate a principal home can be deducted the first year of action. Refinancing is a different story however. If you take a home equity loan, for example, then the points have to be deducted not in the year, but over the entire term of the new loan. There may be special circumstances where you can use part of a refinanced loan to improve your house. See a tax specialist for further advice.

Savings On Tax Free Profit

Another advantage of owning your own home is that you probably won't have to pay taxes on any profit you make whenever you sell your home. Legally, a homeowner is allowed to exclude taxes up to $250,000 in profit from the selling of your principal home. For a couple who file jointly, the price increases to $500,000. This provision also covers the sale of a parcel of land that is adjacent to your principal property. There are a few technicalities to be concerned of, however. Principal property means your primary residence, where you and your spouse live and have lived for at least two of the year five years. You also can only use the tax exemption once every two years. If you do not qualify you still may be able to claim a partial exemption

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