Uncle Sam favors homeowners. Whether you own a starter home, a condo, a single-family residence or a cooperative apartment, you can enjoy tax breaks simply by being a homeowner―and the tax perks continue even when you sell your property.

Your mortgage interest will seriously
reduce your tax bill.
Owning a home comes with serious tax breaks, and none bigger than the relief you get on your mortgage interest payment each month. For most homeowners, this is a huge deduction, since the bulk of the mortgage repayment goes toward interest in the early years of a loan. All that interest is deductible, unless your mortgage loan exceeds $1,000,000. However, the longer you live in your property, the less you'll get from this tax break. By the end of your mortgage term, you are paying more toward the loan's principal than the interest―and the principal is not deductible.

The home equity mortgage tax break allows you to debt shift.
The IRS lets you take out up to $100,000 additional mortgage debt against your home equity and deduct the interest from your income tax. Significantly, you can use the loan for any purpose―not just home improvements. This lets homeowners "debt-shift" to receive preferential tax treatment on their debts. Suppose, for example, you have a credit card balance of $15,000 at 14% interest. None of that interest is deductible. But if you own a house and take out a home equity loan for $15,000, you can pay off the credit card debt and all of the interest on your home equity loan is automatically deductible.

You can deduct the mortgage origination fee.
If you paid points to get a better interest rate on your home loan, you're in luck: the IRS lets you deduct the points in the year you paid them. Because origination fees of 1% or more are common, this can add up to quite a savings. What's more, discount points and loan origination fees are tax deductible to the buyer, even if the seller pays them at closing.

Property taxes are tax deductible on your primary residence and vacation homes.
Property taxes are fully deductible from income tax as an itemized expense on Schedule A. It does not matter if the property in question is a primary residence, vacation home or rental.

Profits on a home sale are usually tax-free.
Homeowners who have lived in their main residence for at least two of the five years before they sell do not pay tax on the first $250,000 of profit from a home sale. You have a profit if you sell the house for more than it cost. Profits in excess of $250,000 ($500,000 for married couples who file a joint return) are reported as a capital gain on Schedule D. As a bonus, you can add the cost of any improvements you make, such as a new roof or patio, to the original purchase price, reducing your taxable profit. On the downside, the tax man does not let you write off a loss if you sell your primary residence for less than what you paid.