Is homeowners insurance tax deductible?

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Every year at tax season, many homeowners wonder if they can deduct their homeowners insurance expenses from their tax obligation. In general, homeowners insurance and associated premiums are not tax-deductible — even if your premium payments are included in your mortgage. According to the Internal Revenue Service (IRS), homeowners insurance is not considered a deductible expense.

While most homeowners won’t be able to itemize their insurance payments on their tax return, there are a few special cases where this may be possible. For instance, small businesses run out of your home may be eligible to deduct insurance expenses. However, even in these special circumstances, you’ll need to meet specific requirements in order to deduct insurance expenses from your tax return.

What is a tax deduction?

A tax deduction is applied to a person or organization’s tax return to lower their taxable income. These deductions are typically available if the person or organization has qualifying expenses throughout the year. When preparing their tax return, individuals with qualifying expenses may choose to take a standard deduction or itemize deductions. If the person or organization chooses to itemize deductions, deductions are only taken for amounts surpassing the standard deduction limit.

According to the IRS, the following expenses qualify for itemized deductions:

  • Healthcare expenses, including medical, dental, and prescription drug bills
  • Home office and job-related expenses
  • Mortgage interest
  • Property taxes

While some special circumstances may allow homeowners insurance deductions on one’s tax return when they’re considered job-related expenses, homeowners insurance is not generally considered a qualifying deduction by the IRS.

Are there home tax deductions for small business owners?

Small business owners are one of two qualifying entities that may deduct homeowners insurance from their tax returns. However, only certain small businesses qualify and there are limits on the amount of homeowners insurance that can be deducted.

For example, if you run a small content marketing business out of your home, your homeowners insurance policy may cover up to a few thousand dollars to protect it. If this is the case, you may be able to deduct the square footage of office space used for your home business as the percentage of total home square footage. That percentage then gets applied to your homeowners insurance premium, resulting in your tax deduction amount.

Businesses must be quite small to qualify for a homeowners insurance tax deduction. Larger businesses — such as a hair salon or daycare service — may not be covered under your homeowners insurance policy and will instead require you to obtain a commercial insurance policy. These policies are not considered deductible expenses by the IRS.

Are there tax deductibles for landlords?

The other qualifying entity for homeowners insurance tax deductions is landlords. If you receive rental income from your home, you may be able to deduct a portion of your homeowners insurance policy on your tax return for the area of the home being used as a rental.

The same rules apply here as they do for home offices: Take the square footage used as rental space and divide it by the total square footage of your home. Apply that percentage to your premium to find the total qualifying deductions for your homeowners insurance policy.

If you own and rent out several properties and the properties are only used as a source of rental income, you may be able to deduct the total amount of homeowners insurance from your tax return. Always consult with a Certified Public Accountant (CPA) to understand whether or not your homeowners insurance is tax deductible for your specific circumstances.

Frequently asked questions

Can I deduct mortgage insurance premiums from my tax return?

Mortgage insurance and homeowners insurance are different things. While homeowners insurance protects your property, mortgage insurance protects you in case you are unable to make your mortgage payments. Mortgage insurance premiums may be deducted from both your personal home and rental properties; however, income restrictions apply.

Can I deduct losses for insurance claims not totally covered by my provider?

If you’ve experienced a loss on your home and your insurance carrier denies your claim, you may not be out of options: You may be able to deduct the expenses as a casualty loss on your tax return. However, this deduction is only available if the property loss occurred in a federally declared disaster area.

What tax deductions are available for those affected by the COVID-19 pandemic?

Unfortunately, there are no tax benefits available for those working from home due to the COVID-19 pandemic. However, if you have a small- or mid-sized business, you may be able to qualify for certain tax benefits for businesses, such as paid leave for workers.

Written by
Carly Severino
Insurance Contributor
Carly Severino has two years of experience in writing for insurance domains such as Bankrate.com, Coverage.com, Reviews.com and TheSimpleDollar.com. She has experience covering a broad range of insurance products, including homeowners, life, auto, and medical insurance. Her expertise has also been called upon in the development of various websites for insurance companies, including Birtwhistle & Livingston, Inc., GovTech Insurance and Tax Title Services.