Aside from owning your own house, homeownership has many positive tax implications as you can benefit from the following

1. Deductions for mortgage interest
2. Deductions for real estate taxes
3. Capital gain exclusion for the sale of a principal residence

The deductions for mortgage interest and real estate taxes lessen the annual cost of homeownership by trimming down the home owner’s tax liability each year.

An example of which is, a home owner with $10,000 in annual mortgage interest payments and real estate taxes and who falls in the 25 percent tax bracket could get up to $2,500 in tax savings each year.

With itemizing taxes, you can deduct from taxable income interest allocable to a first or second home for up to $1 million of mortgage debt and $100,000 of home equity loans.

Most state and local taxes paid on homes are also deductible.

When the home is sold, the capital gain exclusion can again provide home owners a tax benefit.

Under present law, sellers of a principal residence can exclude from taxation profits from the sale of a home, up to $500,000 for married taxpayers and $250,000 for single taxpayers. With capital gain tax rates expected to increase from 15 to 20 percent in coming years, these tax savings can be substantial.

Together with the tax deductions, home buyer tax credits are also available for qualified purchases of principal residences by April 30, 2010--up to $8,000 for first-time buyers and $6,500 for repeat buyers--the tax savings from homeownership make buying a home today a rewarding financial decision.