In the interest of saving money, you may be wondering if you can deduct your homeowner’s insurance come tax time. The answer is not so cut and dried. 

If the home is used solely as your personal residence, your homeowner’s insurance is not tax deductible. Only private mortgage insurance (PMI) can be deducted, and this does not apply to a homeowner’s policy. There are exceptions to this rule. Following are some circumstances where homeowner’s insurance would be tax deductible.




You run a business out of your home

In this case, you can deduct a portion of your homeowner’s insurance costs from your gross income, the deduction of which will be based on the square footage of the space you dedicate to work within your house. Dens and other areas serving as an occasional or temporary office do not qualify. Ask your accountant or financial advisor to ensure your deduction stays within legal guidelines.


You receive rental income

Do you have a tenant living on your property? You could deduct property insurance for this portion of your home as a business expense. 


You have submitted a theft or loss claim

You may deduct the difference between the cost of a loss and your insurance settlement, if you submit a claim for theft, damage or other kind of loss. If the costs go beyond your policy limit and you have to pay out of pocket for loss or damage, you can deduct it on your taxes the next year. Your accountant or financial advisor can help you figure out if your theft or loss claim qualifies for this type of deduction.


What’s a Tax Deduction?


Let’s back up and discuss what a tax deduction is. You pay annual taxes on your taxable income, such as tips, salary and wages, with your tax burden being a percentage of your taxable income according to your specific tax bracket.


When you claim a tax deduction, you are not subtracting that deducted amount from your taxes; rather, you are reporting less income than you thought you would have earned. For some types of insurance, such as disability and life, you can’t deduct insurance premiums from your taxes. You can claim deductions for health insurance provided it qualifies as a business expense.


Homeowner’s insurance is a bit like renter’s insurance, whereby you can deduct the amount you pay in premiums and deductibles if you rent out your home. Likewise, you can get a break on your premiums if you work out of your home. You may also be able to claim home and personal property casualty and theft losses as an itemized deduction on your tax return in the event your insurer denies coverage or you haven’t been fully reimbursed for a loss. 


So, in conclusion, generally, you cannot deduct homeowner’s insurance premiums on your taxes, but you can claim a deduction if you work from home or you are a landlord who rents out the home or a room in the home. 


Contact Bearce Insurance with Your Home Insurance Questions

To learn more about the homeowner’s policies we offer, contact us locally at 508-586-3400 or toll-free at 800-498-9900, or get an online quote today.