There are many benefits to owning a home, such as painting the walls neon yellow if you feel like it, or deciding to knock down a wall to add that gameroom with pool table you’ve always wanted.

But beyond design freedoms, owning a home in Texas has plenty of financial advantages, especially when tax time rolls around. It’s the start of a new year, and we’ll soon get 2006 year-end W2s, 1099s, and other statements we need to complete our 2006 tax returns.

Now is a great time to get organized – and take full advantage of all the deductions you can take, simply by being a homeowner.

Paid points? Deduct them!
If you bought house in 2006 and paid “points” – or a loan origination fee (the cost of obtaining a mortgage) – you can deduct those points in the year you paid them on your tax return.

Points are percentages of your loan, so, if you paid one point on a $150,000 loan, it would be $1,500. Or, if you paid one-and-a-half points on $150,000 home loan, it would be $2,250. First-time homebuyers often pay points

Points have to meet certain requirements before you can deduct them from your return.

If you took out a home improvement loan in 2006 and paid points on that, or a loan to build a home, you can deduct those points, too. Finally, if the seller paid some or all of the points – you can even deduct those IF they were subtracted from the selling price of the home.

You’ll probably need to itemize your deductions when deducting points, which usually means extra work come tax-filing time, but the cost savings is definitely worth it. Your Texas REALTOR® can be a great resource; ask him or her for advice, as well as consult with your tax professional.

Deducting mortgage interest: A great reason to buy a home
When you take a look at your mortgage statement each month, it can be mind-boggling to see the percentage of a typical payment that goes to pay the interest on a home loan.

For example, if your payment is $1,200 per month, using the principle of compound interest – the way mortgage interest is calculated – you’re paying at least 80% of each mortgage payment to interest for at least the first 15 years of your loan.

It may be depressing to think about mortgage interest, but the good news is you can deduct that interest each year off your federal income taxes, drastically decreasing the total amount that’s used to calculate your final tax bill and saving you money in the process.

It also pays to plan ahead when it comes to mortgage interest deductions. For example, if you’re concerned that you might owe money to the IRS in 2008, consider making an extra mortgage payment by Dec. 31, 2007 – you can deduct that January 2007 payment interest when you file your 2008 taxes.

Property taxes: Another big deduction
Texas property taxes can be high throughout the year, so it’s nice to know you can deduct those as well on your 2007 tax return.

While the IRS looks favorably on homeowners, there are some things you cannot deduct, including homeowner’s association fees and mortgage-insurance premiums. Your Texas REALTOR® can be a great source for tax information, but it’s also wise to hire an accountant to help you wade through the details.

Green home? Take advantage of state, federal incentives
Kermit the Frog sang that “it’s not easy being green,” but he’s never been to Texas. The state allows homeowners a property-tax exemption if they’ve added solar or wind-powered alternative energy systems to their home.

There are also several money-saving federal incentives, the result of the Energy Policy Act of 2005 that gave consumers tax credits of up to $500 for using efficient heating, cooling, and water-heating equipment in their homes. If you bought an energy-efficient appliance starting Jan. 31, 2006, you could be eligible for the Residential Energy Efficiency Tax Credit.

If you didn’t invest in energy-efficient appliances in 2006, it’s not too late to do it in 2007 – the federal tax credit period ends Dec. 31, 2007. For more information, see the article at the IRS Web site.

Get organized now for tax success!
If your house is a maze of clutter at the start of 2007, now’s the time to get organized, if for no other reason than to pay less in taxes this year. Studies have shown that those who have their records in order typically pay less to the IRS, so head to an office supply store and pick up some folders and hanging files.

The best way to get organized? Look at last year’s tax return and create folders for all the major categories, like income, interest, investments, business expenses, home improvements, and others. When you start getting reams of mail related to your 2006 taxes, toss them in the right file, and you’ll be good to go.

Plan ahead for 2007 taxes by making duplicate folders. Not only will you save a step, but simply being aware of your financial records will likely help you save money – and headaches – come tax time.

Watch out for tax scams!
‘Tis the season – for tax scams. Texas Attorney General Greg Abbott warns Texans about common scams that start around tax time each year. For example, scams can include businesses offering tax preparation services that aren’t legitimate, or those that promise an immediate refund, or who say they can get you a larger refund (usually by adding false claims and wrong information on your return).

There’s also the kind of scam that would have us believe we don’t have to pay taxes – and that’s just not true. It might be nice to think about, but taxes are not optional. It’s that simple.

There are other scams telling consumers that they must pay to get a homestead exemption in Texas – but filing a homestead exemption has always been free of charge.

Finally, read the fine print in everything – especially your final tax return so all the information is correct – and don’t sign anything without that crucial final review. Need help? Call the IRS Tax Help Hotline at 800/829-1040, or the IRS Hotline at 800/829-0433 to report tax fraud.

Happy filing – and take advantage of those deductions as a Texas homeowner. You’ve earned it!