First, mortgage interest on loans up to $1 million is completely deductible for the year in which you pay it to buy, build or improve your principal residence plus a second home. You can also deduct points you pay to refinance your home – over the life of the loan. You can deduct points paid when you purchase your home in the year paid, no matter who pays them, the buyer or the seller.

When you sell your home, you probably won’t need to worry about capital gains taxes if you own and live in your home at least two years. The exclusion has been raised to $500,000 for married couples and $250,000 for single owners.For more information, see Publication 523, Selling Your Home, on the IRS Web site.

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