The IRS actually has many tax advantages to buying a house. I was reading an article on RealEstateABC.com recently and it really helped explain many of those advantages in layman’s terms. I’ll touch on a few to light the fire.

For example, if you buy and live in your house for two out of the past five years, you can make up to $500,000 on the sale of that house and pay no federal income tax. This is if you are married, it’s up to $250,000 if you are single. But it’s pretty amazing, the first time I heard this I could hardly believe my ears. I mean you have to actually live there as your primary residence, so please don’t try this on a rental.

Did you know that moving expenses related to a new job may be tax deductible? It’s been raised to 18 cents a mile just last year. There is some fine print; such as your new job must be at least 55 miles from your previous home. There is also requirements for a “time test.” You can read more about that on the IRS website.

Some other ways to save is by deducting the interest on up to one million dollars of home mortgage debt, this can also be used for a second home. You can also deduct the interest on home equity debt, up to $100,000; even it is not used for home improvements.

The last little tidbit I picked up from the IRS is helpful when you have to pay off your mortgage early. For example, if you have to move for work or personal reasons and it is necessary to pay off your mortgage early there is typically a “Pre-Payment Penalty.” You can actually deduct that penalty as home mortgage interest. Of course it cannot be a penalty for a specific service performed or cost incurred in connection with your mortgage loan.

These are only a few of the possible ways to take advantage of the tax deductions. You’d definitely want to talk to a tax professional to find out how much you can save. It’s time to start enjoying all the tax advantages of home buying.