Homeowners have tax advantages

Many homeowners don't know all the advantages they have over renters during tax season, such as special tax breaks that could be putting more money in their wallets.

"People sometimes forget about the financial benefits of homeownership," said Jim McEneaney, senior regional vice president of Coldwell Banker Residential Brokerage. "Owning your own home is part of the American dream, but it also gives you a great deduction during tax time that can lead to significant savings."

Here are just some of the ways homeownership can save you money:

Mortgage interest. The interest and property taxes homeowners pay is deductible in most cases. This may mean a reduced tax bill overall and a bigger refund.

Loan deductions. When homeowners borrow against the equity of their home to finance other investments, the interest they pay on the new loan is also tax deductible.

Tax-free profits. According to the Tax Payer Relief Act of 1997, the government allows homeowners to keep tax-free profits from the sale of a home that has been their primary residence for at least two years. Single taxpayers don't owe taxes on the first $250,000 of profit from the sale of a principal residence, while married homeowners get $500,000 when filing jointly.

Claim exemptions. Depending on where you live, certain real estate tax exemptions apply. Homeowners should check with local tax consultants to see if they are eligible for any additional savings.