Homebuyers enjoy many tax benefits!

The deductible expenses can reduce a homebuyer's costs by thousands of dollars a year, and renters who feel buying a home is too big a price to pay should consider the following tax benefits.

Mortgage Interest: This is the big ongoing one. Each year you get to deduct 100% of your interest payment up to $1,000,000.

Property Taxes: This is another ongoing one. Each year you deduct all your real estate tax.

Points on Purchase: This is the most confusing one. You can deduct any points you or the seller pay to obtain the loan for your principal residence. Just remember you can deduct only the points that are itemized in the HUD-1 settlement statement so make sure you get a copy from your title company. (careful when buying from a fsbo).

Points on Refinancing: In this case you can only amortize the points over the life of the loan. In other words, if you have a 30 year loan, you can only deduct 1/30 of the refinancing points each year. By the way, amortization also applies to second homes and vacation homes.

Prepayment Fees: Also deductible in the year of the prepayment.

Relocation Expenses: Because these change periodically, you should discuss this with your tax adviser. Currently these are deductible but there are limits.

In all cases, for specific tax information, you should check with your tax adviser.