"Now is a great time to buy or own a home," said Amy McAnarney, executive director of The Tax Institute at H&R Block. "There are great tax incentives for buying and owning a home, whether you're a first-time homebuyer or a repeat buyer. People selling their homes also need to know if they'll need to report the profit to the IRS."

Buying a home

Homebuyers can make the most of several tax breaks that help lower their tax bill based on the purchase of an existing or new home. For instance:

 --  First-time homebuyers: The Recovery Act provides a credit of up to     $8,000 if a taxpayer buys a home between Jan. 1, 2009 and Nov. 30, 2009.     The homebuyer also must not have owned a home in the previous three years     and the home must be the primary residence. --  Points: The points paid on a mortgage are generally deductible as     interest if taxpayers paid enough of a down payment or earnest money at     closing to cover the points. Homebuyers can deduct the points even if the     seller paid them. --  PMI premiums: Buyers who make a down payment of less than 20 percent     of the home's cost usually pay private mortgage insurance. But the PMI     premiums generally can be included in your home mortgage interest deduction     (see below). --  Job relocation: Taxpayers who moved due to a job change can deduct the     cost of moving. In order to take the deduction, they must move within one     year of starting the new job, work full-time at least 39 weeks during the     first 12 months at the new location, and the new job must be at least 50     miles further than the old residence was from the old job. Qualified moving     expenses include your out-of-pocket cost of moving yourself, your family,     and belongings to the new location.      

Owning a home

If a taxpayer typically has claimed the standard deduction, owning a home will likely mean itemizing for extra deductions. Some tax breaks for homeowners include:

 --  Mortgage interest: For most taxpayers, the biggest tax break comes     from deducting mortgage interest. Taxpayers can deduct interest on up to $1     million of the loan used to buy, build, or make substantial improvements to     a main or second home. Interest on a home equity loan up to $100,000     secured by the main or second home is deductible too.