Your home provides many tax benefits -- from the time you buy it until it's time to sell. Here's a summary of the tax benefits of home ownership; you can get details by visiting the IRS website at http://www.irs.gov.

Mortgage Interest

Joint tax filers can deduct all the interest on a maximum of $1 million in mortgage debts secured by a first and second home. The maximums are halved for married taxpayers filing separately.

You can't use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

Points

There are a variety of lender fees associated with getting a mortgage, notably points. Each point equals 1% of the loan principal. One to three points are common on many home loans, which can easily add up to thousands of dollars. You can fully deduct points associated with a home purchase mortgage. You cannot deduct a mortgage broker's commission.

Refinanced mortgage points are also deductible, provided they are amortized over the life of the loan. Homeowners who refinance, however, can immediately write off the balance of the old points and begin to amortize the new.

Mortgage Tax Credit

A homebuying program called Mortgage Credit Certificate (MCC) allows qualifying first time homebuyers to benefit from a mortgage interest tax credit of up to 20 percent of the mortgage interest payments made on a home (it varies by jurisdiction). This credit is available each year you keep the loan and live in the house purchased with the certificate.

The credit is subtracted, dollar for dollar, from the income tax owed. For example, if you paid $10,000 in interest, your tax credit would be $2,000. The remaining 80 percent of the interest -- $8,000 -- is taken as a typical mortgage interest deduction.

Equity Loan Interest

You may be able to deduct some of the interest you pay on a home equity loan. However, the IRS places a limit on the amount of debt you can treat as home equity debt for this deduction. Your total home equity debt is limited to the smaller of:

• $100,000 for a married couple filing jointly ($50,000 for those who file separately), or
• the total of your home's fair market value -- that is, what you would get for your house on the open market -- less certain other outstanding debts against it.

The IRS rules about the home equity loan interest deduction are complicated. IRS Publication 936 explains the details.

Home Improvement Loan Interest

There is no limit on interest deductions for home improvement loans, provided the work is deemed "capital improvements" rather than repairs.

Qualifying capital improvements are those that increase your home's value or prolong your home's life, including a fence, driveway, new room, addition, swimming pool, garage, porch or deck, new built-in appliances, insulation, new heating/cooling systems, a new roof, landscaping and the like. (Do keep in mind that capital improvements that increase the square footage of your home could trigger a reassessment and higher property taxes.)

Work that doesn't qualify you for an interest deduction includes painting, plastering, wallpapering, replacing broken or cracked tiles, patching your roof, repairing broken windows and fixing minor leaks. Wait until you are about to sell your home to gain tax benefits from repair work. (See Selling Costs, below.)

Property Taxes

Often referred to as "real estate taxes," property taxes are fully deductible from your income. You can't deduct escrow money held for property taxes until the money is actually used to pay your property taxes. A city or state property tax refund reduces your federal deduction by a like amount.

Home Office Deduction

Along with ordinary business expenses, such as photocopies and professional memberships, you can deduct part of your rent or take a depreciation deduction to the extent that a portion of the home you own is used for business purposes.

Selling Costs

Real estate broker's commissions, title insurance, legal fees, administrative costs and inspection fees are all considered selling costs. They also include items otherwise considered repairs -- painting, wallpapering, planting flowers, maintenance and the like -- provided you complete them within 90 days of your sale and provided they were completed to make the home more saleable.

All selling costs are deducted from your gain. Your gain is your home's selling price, minus deductible closing costs, minus your basis. Your basis is the original purchase price, plus capital improvements, minus any depreciation.

Thanks to the Taxpayer Relief Act of 1997, many home sellers no longer suffer a taxable gain. Married taxpayers who file jointly now get to keep, tax free, up to $500,000 in profit on sales of homes used as a principal residence for two of the prior five years. Single folks and married taxpayers who file separately get to keep up to $250,000.

Moving Costs

If you move because you got a new job, you can deduct some of your moving costs. To qualify for these deductions, your new job must be at least 50 miles from the old and you must work full-time at the new workplace for 39 of the 52 weeks following the move. Deductions include travel or transportation costs and expenses for lodging and storing your household goods.

If you are self-employed, you must work full-time for at least 39 weeks during the first 12 months and a total of 78 weeks during the first 24 months after arriving at the new job location.

Other Tax Benefits

Many federal tax benefits are also available from local and state tax agencies. Contact your local tax agency for more information.