Is Homeowners Insurance Tax Deductible In Dec 2023? // Simply Insurance

You probably can't think of many people that get super excited about doing taxes.

And figuring out if homeowners insurance is tax deductible can be a nightmare.

But, it doesn't have to be:

is homeowners insurance tax deductible

There are actually set guidelines that almost never change, that if you meet, you can deduct some of your home insurance coverage from your taxes.

In this post today, I will go over the different situations in which homeowners insurance can be deducted from your taxes and what steps you have to take to qualify for the deduction.

What Exactly Is A Tax Deduction?

A tax deduction is when you deduct an expense from your taxable income.

For example, if you made $75,000 in taxable income this year and had $15,000 in tax deductions.

That would bring your taxable income down to $60,000 and you would only pay taxes on that amount.

For most types of insurance policies, like life insurance and disability insurance, you can’t deduct insurance premiums from your taxes.

You can claim deductions for health insurance (if it’s paid for with after-tax dollars) as well as renters insurance but only if it qualifies as a business expense.

If you rent your home out the premiums and deductibles that you pay in a given year can be deducted from your taxes as a business expense. 

Although you might pay them both, keep in mind that mortgage insurance and homeowner’s insurance aren’t the same thing:

  • Homeowner’s Insurance protects you against a loss from damage to your home.
  • Mortgage insurance protects you in case you can’t make your mortgage payments.
  • earthquake
  • natural disaster
  • irresponsible tenants
  • electric / gas malfunction

However, you can deduct mortgage insurance premiums on both your personal home and rental properties.

Income restrictions apply to mortgage insurance premiums on your home.


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When Can You Deduct Homeowners Insurance?

There are two different situations where you can deduct your insurance payments from your house.

The first one is if you are using your home for your business.

Let's say you have a home office and you only work out of that office for business.

Your house is 1,500 square feet and your room is 450 square feet, this means you are using about 30% of your home for business purposes.

You can actually take off that 30% from your homeowners insurance expense. 

The second way is if you're a landlord and claim rental income on your home, your homeowners insurance on the portion of the property used as a rental becomes tax-deductible.

When you own several properties and those properties are used only for rental income, then all of the homeowners insurance is tax-deductible.

Be sure to consult a tax preparer for more details on how to deduct homeowners insurance.

Tax Deductions For Investing

If you are a real estate investor and have home that you rent out, you can deduct the homeowners insurance for that house as an expense on your taxes.

This is because it is the equivalent of running a business when you start making rental income and homeowners insurance is an expense for that business.

You would need to file a Schedule E form and provide how much rent you collected that year and whether or not you lived at the property yourself during the year.

Tax deductions if you work from home

Working from home has a ton of benefits, you get to avoid traffic, you can't be late, and you get to set your own schedule.

But did you know that you can deduct expenses from your home office.

The amount you deduct is calculated by figuring out what percentage of your home (in square footage) is used for business. If 25% of your house’s square footage is used for work, then 25% of the amount you paid in premiums for the year would be deducted from your taxable income.

However, keep in mind that your home office needs to actually be designated for that and only work happens in there.

Examples of deductible casualty losses are:

  • Floods
  • Earthquakes
  • Mine cave-ins
  • Fire (non-malicious/unintentional)
  • Government-ordered demolition or relocation
  • Terrorism
  • Vandalism
  • Sonic booms
  • Volcanic eruptions
  • Storms like hurricane and tornadoes

Examples of deductible casualty losses are:

  • Wear and tear
  • Termite or moth damage
  • Damage a pet does to your home
  • Losses of property because of a drought
  • Fire you willfully set or you paid someone to set
  • Accidentally breaking items under normal circumstances
  • Damage or destruction of trees, shrubs, and other plants because of fungus, or disease.

Claiming A Deduction For Partial Payout

If you are a victim of theft or a casualty loss and your claim doesn't pay out enough to cover the entire loss, you can deduct the difference.

For example, if you file a claim to fix your roof that was damaged by a tree, the claim is approved, however, it isn't enough to fix the total roof and you have to come out of pocket for the difference.

You can deduct the difference from your taxes. 

The only downside to this is that if a payment for a loss exceeds your property's current value you might have to report the amount as a taxable gain on your taxes.

You can also get deductions on your homeowners insurance deductibles — the amount you pay to an insurer before they pay out a claim — but you must meet the $100 / 10% rule first.


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Agents not required.

Get quotes and sign up online without talking to an agent. But, we are here if you need us.

Unbiased, expert advice.

Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.

Coverage in minutes.

You can get home insurance coverage within minutes of getting your quotes and applying.

Write Off Claims Your Insurer Won’t Fully Cover

Having an insurance claim denied feels like betrayal, I mean, you pay a large sum of money on a monthly basis and when it is time for the insurance company to pay up, there is an issue.

Well, in the very rare occasions of this happening, if this happens to you, you could just deduct it as a casualty loss.

is home insurance tax deductible

A casualty loss is a deduction of the affected property's current value on your tax return.

You can also do the same thing for personal property and these deductions can be filed using Form 1040, Schedule A for itemized deductions.

How To Deduct The Losses

If your property or asset loses value, that is considered a loss and in order to receive a deduction on a loss you must first file a claim with your home insurance company within 30 days of the incident.

In order to figure out how much to calculate we will have to do a small bit of math.

Each individual loss has $100 take off the top of it.  After that, 10% of your adjusted gross income is subtracted from the combined loss amount.

For instance:

If you file itemized losses of $4,000 and 5,000, your loss amounts are actually 3,900 and $4,900 ($100 taken from the top) and your total is $8,800.

If your adjusted gross income is $100,000 the 10% threshold would be 10,000 which meansyou would only get to reduce your taxbale income by $1,200.

Now, if you suffer a loss to property used for business, like a rental property you aren't required to reduse the loss by $100 or use the 10% adjusted gross income rule.


Home insurance by state.

Claiming A Casualty Loss On Your Taxes

If you are ever in a situation where your home or personal belongings were destroyed or damaged and your homeowners insurance company denies your claim, you can claim a casualty loss.

This loss can only be claimed, however, under specific situations that the IRS has stated which are:

  • Sudden and unexpected events — swift, unanticipated, and unintended rather than gradual
  • Unusual events — not a day-to-day occurrence

Take Action

Hopefully I have clearly answered the question is homeowners insurance tax deductible.

There are several instances when you are able to deduct your homeowner's insurance from your taxes. However, be sure that you meet those guidelines before trying to apply for the deduction.

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