Not just a shelter from the elements, your home also serves as a valuable tax shelter.

Your home provides many tax benefits -- from the time you buy it right on through when you decide to sell. Here's a summary of the tax benefits of home ownership; for details, visit the IRS website at http://www.irs.gov.

1. Mortgage Interest

If you're filing jointly, you can deduct all your interest payments on a maximum of $1 million in mortgage debt secured by a first and second home. The maximums are halved for married taxpayers filing separately.

You can't use the $1 million deduction if you pay cash for your home and later use it as collateral for an equity loan.

Learn more from IRS Publication 936, Home Mortgage Interest Deduction, available at http://www.irs.gov.

2. Points

Your mortgage lender will charge you a variety of fees, one of which is called "points." A point is calculated at 1% of the loan principal. One to three points are common on home loans, which can easily add up to thousands of dollars. You can fully deduct points associated with a home purchase mortgage. You cannot deduct a mortgage broker's commission.

Refinanced mortgage points are also deductible, provided they are amortized over the life of the loan. Homeowners who refinance can immediately write off the balance of the old points and begin to amortize the new.

3. Equity Loan Interest

You may be able to deduct some of the interest you pay on a home equity loan or line of credit. However, the IRS places a limit on the amount of debt you can treat as "home equity" for this deduction. Your total is limited to the smaller of:

• $100,000 (or $50,000 for each member of a married couple if they file separately), or
• the total of your home's fair market value -- that is, what you would get for your house on the open market -- less certain other outstanding debts against it.

The IRS rules about the home equity loan interest deduction are complicated. IRS Publication 936, Home Mortgage Interest Deduction, available at http://www.irs.gov, explains the details.

4. Home Improvement Loan Interest

If you take out a loan to make substantial home improvements, you can deduct the interest on this loan. There is no dollar limit on this deduction. However, the work must be a "capital improvement" rather than ordinary repairs.

Qualifying capital improvements are those that increase your home's value, prolong its life, or adapt it to new uses. For example, qualifying improvements might include adding a fence, driveway, new room, swimming pool, garage, porch or deck, new built-in appliances, insulation, new heating/cooling systems, a new roof, landscaping, and the like. (Do keep in mind that capital improvements that increase the square footage of your home could trigger a reassessment and higher property taxes.)

Work that doesn't qualify you for an interest deduction includes such repairs as repainting, plastering, wallpapering, replacing broken or cracked tiles, patching your roof, repairing broken windows, and fixing minor leaks. Wait until you are about to sell your home to gain tax benefits from repair work. (See Selling Costs and Capital Improvements, below.) However, you can use a home equity loan, up to the limits discussed above, to make repairs and deduct the interest.

5. Property Taxes

Often referred to as "real estate taxes," property taxes are fully deductible from your income. You can't deduct escrow money held for property taxes until the money is actually used to pay your property taxes.

A city or state property tax refund reduces your federal deduction by a like amount.

6. Home Office Deduction

If you use a portion of your home exclusively for business purposes, you may be able to deduct home costs related to that portion, such as a percentage of your insurance and repair costs, and depreciation. For details about this tax break, see Home Business Tax Deductions: Keep What You Earn, by Stephen Fishman (Nolo).

7. Selling Costs and Capital Improvements

If you decide to sell your home, you'll be able to reduce your taxable capital gain by the amount of your selling costs.

Real estate broker's commissions, title insurance, legal fees, advertising costs, administrative costs, and inspection fees are all considered selling costs. In addition, the IRS recognizes that costs ordinarily attributed to decorating or repairs -- painting, wallpapering, planting flowers, maintenance, and the like -- are also selling costs if you complete them within 90 days of your sale and with the intention of making the home more saleable.

All selling costs are deducted from your gain. Your gain is your home's selling price, minus deductible closing costs, minus selling costs, minus your tax basis in the property. Your basis is the original purchase price, plus the cost of capital improvements, minus any depreciation.