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If you have a home of your own or would like to buy one, watch out for the 3 new tax breaks that can help you save more.

1. Mortgage Debt forgiveness: There are homeowners who are not able to carry on with their mortgage payments and as such they may opt for foreclosure, short sale, deed-in-lieu and the like. While doing so, they may not be able to recover the entire debt. This is when the lender has no option but to forgive the debt.

The amount of debt canceled is considered as income and hence taxes should be paid on it. But with the Mortgage Forgiveness Debt Relief Act, 2007 coming into effect, homeowners can exclude the taxes on this debt amount.

2. Mortgage Insurance: Homeowners opting for loans with private mortgage insurance can deduct their premiums from the taxes and this will continue for the nest 3 years.

3. Capital gains tax for surviving spouse: The federal laws offer tax break on capital gains obtained from the sale of their primary residences. However, if the spouse passed away, say in February, the surviving spouse had to sell home within the same month in order to exclude $500,000 in taxes otherwise one could only exclude $250,000.

Currently, as per the new laws, a surviving spouse could claim $500,000 if the home is sold off within 2 years after the spouse’s death. So the surviving spouse need not pay the additional tax of $250,000 as per the old laws.