Tasty Tax Tip #4: Buy a House

Tasty Tax Tip #4: Buy a House

By Kay Bell, Bankrate.com

The first-time homebuyer credit is no longer available, but owning a home still offers many good tax breaks. Sure, the bipartisan National Commission on Fiscal Responsibility and Reform has suggested that the mortgage interest deduction be eliminated or at least reduced. That won’t happen any time soon.

Other home-related costs, such as property taxes and points paid to get a lower home loan interest rate, also are deductible, as is interest on home equity loans up to $100,000.

The biggest home-related tax benefit, though, could come when you eventually sell. As long as you live in your home for two of the five years before you sell, you won’t owe taxes on up to $250,000 in profit (or $500,000 for a married couple filing a joint return) from the sale of your principal home.

And if you did take advantage of the very first first-time homebuyer credit on your 2008 tax return, remember that when you file your 2010 Form 1040 this year, you’ll have to start paying back that $7,500 tax break.

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