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Bankrate's 2008 Tax Guide
Realty/capital gains
Home, sweet home. It's likely your biggest investment and it affords you some great tax breaks to boot.
First-time homebuyer's guide to taxes
First-time homebuyers' guide to taxes

There's nothing quite like purchasing your first home. You're on your own. You have a substantial financial investment.

And you now have some different tax considerations.

You're probably well-aware that homeownership affords you several new ways to save on the annual Internal Revenue Service bill.

"Homeownership is one of the best tax benefits that the federal government gives out," says attorney Robin Gronsky, principal of Gronsky Law Offices in Ridgewood, N.J. "People count on it. It's how they calculate their out-of-pocket costs in owning versus renting."

What you're probably less sure of is exactly how to go about taking advantage of all your new house-related tax breaks.

Many first-time homeowners will definitely enter new tax-filing territory with the very first return they file after moving into their new abode. For other new owners, the filing changes might take a little longer to show up.

But all will need to know some basic tax rules that could make their homes a great tax -- as well as an actual -- shelter.

You survived the house search and the bidding process. Getting the mortgage on your new home was a piece of cake. But now you've got to file your tax return for the first time since you moved into your first home. Relax.

First-home taxes
You'll probably find that as a new homeowner, you'll save on your taxes. But there are some specific things you need to pay attention to so that you get every available tax break.
10 tax tips for homebuyers
1. Welcome to Schedule A
2. Making the most of mortgage interest
3. Hang onto your HUD-1
4. Points pay off at tax time
5. The tax-deduction value of property taxes
6. Timing is everything
7. Other deductions, thanks to your home
8. What's not deductible
9. Not federal, but tax-related
10. Planning ahead

1. Welcome to Schedule A
As a homeowner, regardless of whether you're a first-timer or have owned many residences, you probably immediately think "deductions" when it comes to tax time. That's because you now have the chance to claim several expenses you didn't face as a renter.

The big-three home-related deductions are mortgage interest, any points connected with the loan and property taxes. To claim these, you'll have to itemize.

This deduction method, which requires filing the long Form 1040 and detailing your various deductible expenses on Schedule A, is often a new experience for first-time homeowners.

However, before you rush off to download this new tax paperwork, take a few minutes to evaluate your overall filing circumstances. While many homeowners do benefit by itemizing, that's not the case in every situation.

You want to make sure that the deduction method you choose is the one that gives you the larger deduction amount. If you find that the standard deduction, which on 2007 taxes is $5,350 for single taxpayers and $10,700 for married couples filing a joint return, is greater than the total of your itemized expenses, then by all means take the standard deduction.

Don't worry, you're not stuck using that method forever. You can alternate between the two deduction options every year or you can itemize for several years, claim the standard amount for a few more and then return to itemizing.

The key is to always pick the deduction method that will give you the most tax savings for each filing year.

-- Updated Jan. 10, 2008
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