If you’re currently renting, consider the tax advantages of homeownership. Know what expenses you can deduct, and understand how new laws affect you.

Here are the top 10 tax tips for homeowners:

1. Deduct mortgage interest and real estate taxes-interest paid on home loans is deductible up to $1 million for a principal residence plus a second home. Property taxes on all real estate are fully deductible.

2. You can deduct any money paid toward points or origination fees if you bought a home this year. Closing costs are not deductible. Points paid on a new mortgage loan for the purchase or improvement of a principal residence are deductible for the year in which they were paid.

3. If you refinanced your mortgage this year or took out a loan to buy a second home or investment property, you can deduct any points you paid equally over the life of the loan.

4. Deduct private mortgage insurance (PMI)-taxpayers with adjusted gross income of $100,000 or less can fully deduct premiums for PMI. The deduction is allowable only for insurance on loans that were originated after 12/31/06 and before 01/01/11.

5. Deduct moving expenses if you moved 50 miles or more for a new job. If you relocated for a new full-time job at least 50 miles away from your previous home, you can deduct the cost of packing, transporting or storing your household goods.

6. If you sold your house this year, see if you’re subject to a capital gains tax-if the profit you received from the sale of your house is under $500,000 for married couples or $250,000 for single owners, you are exempt from the capital gains tax.

7. Home improvements and mortgage closing costs are not tax deductible, but when you sell your house, they can be used to offset your capital gains tax burden should you have one.

8. If you did a short sale this year, the debt forgiven by your lender can be excluded from your taxable income. Thanks to a new law, you can exclude debt up to $2 million if it was discharged by the lender in 2007, 2008 or 2009.

9. Take advantage of energy efficiency tax credits-going green is good for the environment and your wallet. You can quality for a tax credit with documentation of energy efficient updates to your home.

10. If your home was damaged from a sudden, unexpected event, such as a natural disaster, fire, vandalism or theft, deduct some of the loss. You may deduct all expenses not covered by your homeowner’s insurance, minus a $100. deductible and 10 percent of your adjusted gross income.

Some of the best perks of owning a home are the tax breaks. This may be the time to buy a home. Remember to consult your tax advisor.

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1. home loans says:

   July 20, 2008 at 2:54 am

   There are several things you can do to get the best possible loans but he first thing is to make sure you know your options. Thanks for the info!
2. Small Business Tax Guru says:

   November 23, 2009 at 1:37 am

   I’ve been involved in taxes for longer then I care to acknowledge, both on the personal side (all my employed life history!!) and from a legal standpoint since satisfying the bar and pursuing tax law. I’ve furnished a lot of advice and corrected a lot of wrongs, and I must say that what you’ve put up makes complete sense. Please persist in the good work – the more people know the better they’ll be armed to cope with the tax man, and that’s what it’s all about.