Now that we're over home flipping, let's get back to the realities of the true profits of owning a home. With the exception of 2007, homes have increased in value nationwide one to two points above inflation levels, which is good, but it's not an incredible return.

But when you add in government incentives, you can just about live for free when you own your own home, counting getting your equity back when you sell.

Did you know that when you pay points to take out a mortgage, whether you or the seller paid, you can deduct it? Hello, $1,000 or more!

Federally insured loans are another benefit. With home prices rising more quickly than incomes in many areas, qualifying for a conventional loan has been a challenge, but conforming loan limits have been temporarily raised, allowing people to buy higher cost homes using FHA, Fannie Mae and Freddie Mac guidelines. Home loan limits of $417,000 have been raised to $625,000 in many areas.

One of many benefits is being able to deduct property taxes from your federal income tax return. If you're a renter, you're paying someone else's property taxes and getting zero deductions. In effect, you're throwing two percent of your net income away. And that doesn't count the equity you're building for your landlord.

The government believes that homeownership means more stability for communities. So, whenever the economy goes in the tank and homeowners lose homes in greater numbers than usual, the government pulls out a tax benefit that makes it irresistible to own a home.

Usually when you sell an asset, you have to pay capital gains on it. When you make money, you pay taxes. But those concepts went out the window with the Tax Relief Act of 1997.

Before then, homeowners had a one-time lifetime capital gains exclusion when they sold a homestead. After 1997, you could sell your homestead and keep the capital gains up to $250,000 as a single or $500,000 as a married couple.

In addition, your mortgage interest is tax deductible, up to $1 million in mortgage debt. Thanks to the Mortgage Forgiveness Debt Relief Act of 2007, you can also deduct your mortgage insurance interest.

If your household makes an adjusted gross income of $100,000 or less, you can deduct PMI on your tax return. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction, so if you bought a home without 20 percent down or excellent credit, you can now deduct your PMI until 2010.

And that's just a few of the federal benefits, folks. We haven't even begun to talk about hardship benefits, property inheritance benefits, or what your state or local community offers in homebuying incentives. Take Florida, where Realtors are reporting increased interest in homebuying due to the new portability provision in the state tax code which allows homeowners to transfer their Save Our Homes tax benefits from their old homestead purchased in 2007 to a new home.

The bottom line is that while homebuying is subsidized by the government, you'd be a fool not to take advantage. Just buy within your means, please.

Published: March 28, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.