The current federal and state tax laws favor and generously reward home ownership. There are numerous ways a homeowner will save on taxes while building equity in their property.

1. All of the interest paid toward a home mortgage is fully tax deductible. For example: If the total mortgage payment is $3,000 per month - where in the early stages of your mortgage most of the payment is interest - lets assume the interest is $36,000 per year ($3,000 x 12). If you are in the 28% tax bracket, a $36,000 deduction means a federal tax savings of over $10,000. Meanwhile, your home continues to appreciate in value.
2. All the money you pay in real estate tax is fully deductible.
3. When your home is your principal residence and you decide to sell, you may exclude up to $250,000 of your total gain ($500,000 if you are married and file a joint return). This exclusion is allowed each time a taxpayer sells or exchanges a principal residence, although the exclusion generally may not be claimed more frequently than once every two years.