• The IRS offers a number of tax breaks for homeowners.home sweet home image by easaab from Fotolia.com
  
  When you transition from renting to owning your home, the IRS allows you to take a number of new tax breaks. Some of these tax breaks are available only to people purchasing their first home, while others are available to all homeowners. Tax credits allow you to decrease the amount of tax you owe, while tax deductions allow you to decrease your taxable income. Itemized deductions require you to give up your standard deduction in order to claim them.
  
  

First-Time Home Buyer Tax Credit

• If you purchased your first home between Jan. 1, 2009 and May 1, 2010, you may be eligible for a tax credit of 10 percent of the purchase price of your home, up to $8,000. To qualify, the home cannot be purchased for more than $800,000 and your adjusted gross income (AGI) must meet the stated limits: if your home purchase occurred before Nov. 6, 2009, married couples must have an AGI below $170,000 and single filers must have an AGI below $90,000. For purchases after Nov. 6, 2009, the limits increase to $245,000 for married couples filing jointly and $145,000 for single filers.
  
  

Mortgage Costs

• If you have taken out a new mortgage, you can deduct the points that you pay to lower your interest rate in the year that you pay them as an itemized deduction. This applies to any first mortgage you take out on a home but not the refinances, home equity loans or second mortgages. In addition, you can deduct the interest that you pay on your mortgage, up to the interest on the first $1 million of the loan if you are a joint filer or $500,000 if you are a single filer. At the end of the year, you will receive a form 1098, which shows how much money you paid in points and in interest so you can report the proper amount on your taxes.
  
  

Real Estate Taxes

• When you own your home rather than renting, you usually have to pay property taxes. This amount will vary based on the value of your home and the property tax rate. However, the IRS allows you to deduct up to $500 of the real estate taxes as an adjustment to income, meaning you don't have to forgo the standard deduction. If your real estate taxes exceed $500, you can take the remainder as an itemized deduction.