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Is Homeowners Insurance Tax Deductible?

Updated
Dana George
Robin Hartill, CFP
By: Dana George and Robin Hartill, CFP

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Eric McWhinnie
Check IconFact Checked Eric McWhinnie
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There is no denying that homeowners insurance is a necessity. After all, when a catastrophe hits, it's insurance that makes things right. But is homeowners insurance tax deductible? Could you save more by deducting the premium even after any savings and discounts on home insurance you score? Here, we'll find out if house insurance is tax deductible and look at other tax deductions for homeowners.

When can you deduct home insurance premiums?

Usually, you aren't allowed to deduct homeowners insurance premiums on your taxes. But there are two exceptions

  • You run a business out of your home. If you use your home to run a business, you can deduct the portion of home expenses, including your home insurance, based on the percentage of the home that's used solely for business purposes.  Let's say you have a 2,000-square-foot home and use 300 square feet of space to run your business (300 square feet is 15% of 2,000 square feet). That means you can deduct 15% of your annual homeowners insurance premium. If, for example, you pay $1,200 a year in homeowners premiums, you'll be able to deduct $180 ($1,200 x 0.15 = $180).
  • You own rental property. Property insurance is a deductible business expense if you own rental property and receive rental income.

Other tax deductions for homeowners

The good news for homeowners is that there are other homeowner tax deductions, even if a homeowners insurance premium is not one of them. Simply put, tax deductions are the best way to reduce taxable income and save money.

When a taxpayer files their annual tax return, they have two choices. They can take the standard deduction or an itemized deduction -- whichever deduction offers a more significant tax benefit. In 2023, the standard deduction is $27,700 for married couples filing jointly and $13,850 for single filers. If your deductions don't exceed these amounts, you're better off taking the standard deduction. 

Because they have so many potential deductions associated with homeownership, some homeowners opt to itemize their deductions. Here are the most common home tax deductions,

Mortgage interest

When a homeowner borrows money from a mortgage lender, they repay the loan with interest. Generally, you can deduct the interest you pay on the first $750,000 of mortgage debt for a home you bought Dec. 17, 2017 or later. If you bought a home before that date, you can deduct interest paid on the first $1 million of mortgage debt. 

Own a home? Then you should check out The Ascent's guide to the mortgage interest deduction.

Mortgage insurance

Homeowners who took out their mortgages after 2006 can deduct part or all (depending on their income) of the cost of insuring their mortgages. This includes:

Mortgage points

Mortgage points (sometimes referred to as "discount points'') are fees paid to lower the interest rate on a mortgage. They are treated the same way other mortgage expenses are treated for tax purposes and can be deducted.

Property taxes

All or part of the property taxes paid by a homeowner can be deducted from their annual tax return. For example, for the 2020 tax year, married couples filing jointly could deduct up to $10,000, or $5,000 if you're married filing separately.

Interest on home equity loan

Homeowners who use a home equity loan or home equity line of credit (HELOC) to make substantial home improvements can deduct the interest paid on the loan. One caveat: The total deduction cannot exceed the mortgage interest deduction limit imposed by the IRS.

Expenses for home office

As mentioned, if you are self-employed and run a business from home, you may be able to deduct expenses for the portion of your home that's used exclusively for business purposes. If you are at all intimidated by the rules surrounding home office deductions, a tax professional may be your best bet. The taxes you save will likely cover the fee paid for professional advice. At the very least, you'll have peace of mind, knowing you took every possible deduction.

While the answer to, "Is home insurance tax deductible?" is generally no, there are plenty of other tax breaks for homeowners. For more insight into homeowners insurance, visit this guide to homeowners insurance page.

You may also qualify for discounts on homeowners insurance through your carrier. For example, many insurers offer discounts if you have a newly constructed home, you've gone many years without filing a claim, or you've added safety features.

FAQs

  • Homeowners insurance may be partially tax deductible for those running a business from their home. Other deductible expenses include:

    • Mortgage interest
    • Mortgage insurance
    • Property taxes
    • Interest on a home equity loan or HELOC
    • Costs related to working from a home office
  • Only if you're self-employed and you use part of your home exclusively for business purposes. The Tax Cuts and Jobs Act suspended the home office deduction from 2018 to 2025 for W-2 employees.

  • Yes, but only in three situations:

    • When damage is related to a federally recognized disaster
    • When part of your home is used for business
    • When damage is to a rental property owned by you
  • You can only write off flood insurance on your taxes if you use the home for business purposes (in which case, you can deduct a percentage) or it's a rental property.

  • No. Installing a new roof on your main home is considered a home improvement and is not tax deductible. You can deduct the cost of installing a new roof on a rental home you own -- although it will have to be deducted over time.

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