What is the smartest purchase you will ever make? Well, buying a home of course. One reason is that owning a home has multiple positive tax benefits. Once you become a homeowner you qualify for three important sources of tax savings:

1. Deductions for mortgage interest.
2. Deductions for real estate taxes.
3. Capital gain exclusion for the sale of a home.

The deductions of real estate taxes decrease the annual cost of owning a home by dropping the home owner's tax responsibility each year. If you own a home with $10,000 yearly mortgage interest costs and you fall in the 25 percent tax bracket, you qualify for up to $2,500 in tax savings each year. Not to mention that in most state the taxes paid on your home are deductible.

Not only will you save overall on taxes by purchasing a home, you will receive a tax benefit when you sale a home.

"Under present law, sellers of a principal residence can exclude from taxation profits from the sale of a home, up to $500,000 for married taxpayers and $250,000 for single taxpayers. With capital gain tax rates expected to increase from 15 to 20 percent in coming years, these tax savings can be substantial." , according to the According to National Association of Home Builders.

The NAHB economists estimate that a married couple with an annual income of $80,000 and a mortgage rate of $250,000, will save on taxes from the mortgage interest and real estate tax deductions more than $11,000 in the first five years of owning a home. If the couple owns the home for twelve years, the savings will grow to $25,000. In collusion if you combined the capital gains exclusion and the total tax savings for the entire period of owning the home the savings will surpass $52,000.

With the home buyer tax credits available with up to $8,000 for first-time home buyer and $6,500 for repeat home buyers, buying a home today is a rewarding financial decision. Find out more at http://www.federalhousingtaxcredit.com/.