12 April 2008 - With April 15 just days away, it's a good time to make sure you haven't missed any of your homeownership-related tax deductions - especially since some homeowners, for the first time ever, have a brand-new deduction they can take.

The new tax break is the result of two recent congressional bills that allow homeowners to deduct premiums paid for private and government mortgage insurance - a common requirement when buyers have down payments less than 20 percent.

This new deduction applies to taxpayers with adjusted gross incomes of less than $100,000 whose mortgages originated between 2007 and 2010, says the Mortgage Insurance Companies of America. Families with incomes between $100,000 and $109,000 are eligible for a partial deduction.

"On average, this year's tax break could be worth $350 per taxpayer - an annual deduction that qualified homeowners can take each year through 2010," said MICA President Kevin Schneider in a statement.

This deduction is particularly significant in light of today's tighter lending standards.

During the early part of the decade, it became popular to take out a second "piggyback" mortgage with a higher interest rate as a way of avoiding a lender's private mortgage insurance requirement. The first lower-cost loan would cover 80 percent of the property's value while a second, higher-cost loan would cover 5, 10, 15 or 20 percent of the value, depending on the borrower's down payment. One reason this was such a popular choice was because the interest on both the first and second loans was tax deductible, while the mortgage insurance was not.

With the new deduction, private mortgage insurance and government-insured products, such as FHA loans, have made a comeback in recent months. The deduction is particularly helpful because it makes private and government mortgage insurance a more affordable option at a time when piggyback loans are harder to come by.

But the new mortgage insurance tax break isn't the only deduction helping today's homeowners and home buyers. In addition to this new deduction, several other deductions are helping make homeownership more affordable at tax time:

The mortgage interest deduction: Perhaps one of the most popular tax breaks, the mortgage interest deduction allows you to deduct all the interest you pay on your mortgage in the year it is paid. Because your payment is mostly interest in the early years of your mortgage, this can add up the thousands of dollars in tax savings. It can also apply to mortgage interest paid on second homes, home equity loans and piggyback mortgages.

Property tax deduction: Another major tax break for homeowners, the property tax deduction allows you to deduct all state and local property taxes from your federal income tax return in the year they are paid.

Home purchase deductions: Even though many of the expenses you incur when you purchase a home are not tax deductible, there are several exceptions. In some cases, you may be able to deduct the amount you pay for points and loan origination fees.

Tax-free profits: When you decide to sell your home, the government allows you to keep a chunk of the profits tax-free as long as you have lived in the house for two of the past five years and only claim the tax break once every two years. Single filers can have a non-taxable profit of up to $250,000 on the sale of the house while married couples filing jointly can have up to $500,000 in tax-free profits.

As you can see, your home can help you save thousands of dollars in taxes. For more information about homeownership and its tax and investment benefits, consult with your tax advisor and your Realtor.