It's no wonder a record 66.8 percent of all Americans own their home. Federal tax deductions designed to promote home ownership save consumers plenty in taxes when they buy, while they own and when the sell their home. Your home is your first tax shelter. If you live in an apartment and you move out, you've got nothing. The primary tax benefit of home ownership is the mortgage interest deduction.
Most homeowners deduct all they pay.
The maximums are halved for married tax payers filing separately. Mortgage interest, along with other itemized deductions, are included on ''Schedule A, Itemized Deductions.'' It reduces your taxable income, and as such, your tax bill. An MCC, which you first must obtain from your local housing department before you get a mortgage, gives a qualified first-time home buyer a federal income tax credit of up to 20 percent each year the buyer keeps the same loan and lives in the same house. As explained in IRS Publication 530, ''Tax Information for First-Time Homeowners,'' the credit is subtracted, dollar for dollar, from the income tax owed. You can see the tax credit's benefit immediately in your paycheck by adjusting your W-4 exemption status to reflect the credit.