1. Mortgage Interest Deduction
Mortgage interest paid during the year is an income tax deduction. For many people this could be a huge deduction.
2. Points Paid
The first year you buy your home you are able to claim the points (sometimes called origination fees) as tax deductions no matter whether they are paid by you or the seller.
3. Home Equity Interest Deduction
In addition to mortgage interest, you can deduct interest you paid on a home equity loan (or line of credit). This may allow you to shift credit card or student loan debt from a higher interest to lower interest all while allowing an income tax deduction.
4. Private Mortgage Insurance
Depending on your income levels, you may be able to take a tax deduction for PMI paid.
5. Real Estate Property Tax Deduction
Real estate property taxes paid on your home or other properties are tax deductible.
6. No or Limited Tax on Profits From Sale of Home
Profits up to $500,000 ($250,000 single) from the sale of your primary residence of which you have lived in 2 out of the last 5 years are excluded from income tax.