If you're able to itemize your deductions you will be able to claim mortgage interest and property taxes on the home. People who usually would get no benefit from itemizing, often find that changes after purchasing a home. Since the majority of your first several years payments is interest, that will push people over the standard deduction, therefore making it worthwhile to itemize. The standard deductions for 2007 are:
Single - $5,350
Married filing Joint or Surviving Spouse - $10,700
Head of Household - $7,850
Married filing separately - $5,350
As mentioned above, points or prepaid interest is also deductible. However, you normally can't deduct them all at once. They have to be amortized over the life of the loan. In other words if your loan is for 36 years, you would take your
total points, divide by 36, and deduct that amount each year. There are cases where you can deduct them all in the first year, but there are quite a few conditions to meet first.
That's pretty much it while you own the home, unless you use it as a home office or something. There are some small credits for qualified energy-efficient improvements. Look up Form 5695 at www.irs.gov, and read the instructions. The most you can claim is $500.
You can exclue up to $250,000 worth of the gain on the sale, or $500,000 if you're married filing jointly when you sell the home, as long as you meet the requirements (most important of which is living in the house two years out of the prior five years).
Hope this helps!
Source(s): work in taxes :-)