Is Homeowners Insurance Tax-Deductible?

Homeowners insurance isn’t deductible, but mortgage insurance and certain rental property costs may be.

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By Ross Martin

Reviewed By Beth Swanson

Edited By Kristine Lee

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Homeowners insurance and taxes
When Homeowners Insurance Costs Are Tax-Deductible
Maximize Tax Returns
FAQs

Homeowners insurance and taxes: is it deductible?

When it comes time to file your income taxes, you want to explore every possible way to save money. If you're a homeowner, chances are you have wondered whether or not your home insurance premiums are tax-deductible. In short, payments toward your personal home insurance policy are not tax-deductible.

However, there are some insurance-related ways to receive a tax break. Read on to learn more about the types of insurance that are tax deduction-eligible.

Remember that if you have specific questions about your tax situation, please contact a tax professional.

Key takeaways

Personal home insurance premiums are not tax-deductible
Rental property and home office insurance costs may be tax-deductible
Mortgage insurance (PMI) can be claimed as a tax deduction
Other home-related expenses, such as mortgage interest, home improvements for health reasons, and property taxes, may also be eligible for tax deductions

A brief overview of tax deductions

The Internal Revenue Service (IRS) assesses your overall income over the previous tax year when determining how much you owe. However, you have the opportunity to deduct some of your taxable income when filing, giving you the chance to write off certain living expenses and save money on your amount owed.

There are two different types of deductions you can claim: a standard deduction and an itemized deduction.

Standard Deduction: This is a fixed amount, varying based on your filing status, which reduces your taxable income.
Itemized Deduction: This involves detailing individual expenses like charitable contributions, medical expenses, or other specified costs. If these expenses are substantial, itemizing your deductions could potentially lower your tax bill.^[1]

What Is hazard insurance?

Hazard insurance is part of a homeowners policy, specifically protecting your home against natural disasters. Hazard insurance (also known as dwelling coverage) protects the physical structure of your home. This part of your coverage deals with rebuilding your home and covers damage from fires, blizzards, snow, etc.

When homeowners insurance costs are tax-deductible

The general rule is that insurance on personal properties is not tax-deductible. However, certain exceptions apply:

Situation	Explanation
Rental properties	Insurance premiums for rental properties can be deducted as they're seen as business expenses. These include coverage for damages to rental units, liability coverage protecting personal assets, and payments covering employees related to your rental business.
Home office deductions	For self-employed homeowners or those with a home office, certain business-related expenses, including insurance costs, can be deducted.

Additional homeowner tax deductions

Owning a home comes with some tax implications. Property taxes can be quite expensive, depending on where you live. But there are some ways to reduce the amount of taxes you owe. Have a look at a few other ways to save below:

Health-related home improvements: If you've made any health-necessitated updates to your home such as installing entry ramps or railings, these costs can be deducted on your taxes.
Property tax teductions: Homeowners can typically deduct up to $10,000 in property taxes.

Note: the Mortgage Interest Tax Deductions for mortgage insurance payments has expired.

Can I deduct homeowners insurance if I work from home?

If you use part of your home exclusively and regularly for business, you may deduct a portion of your homeowners insurance through the home office deduction. The deductible amount is based on the percentage of your home used for business. For example, if your office occupies 10% of your home, you can deduct 10% of your insurance premiums.

However, this deduction has strict eligibility rules. It is only available to self-employed individuals, freelancers, and business owners—W-2 employees working remotely do not qualify under current federal tax laws. To ensure compliance and maximize deductions, consult a tax professional or review IRS guidelines.^[2]

Strategies for homeowners to maximize tax returns

Maximizing your tax return involves strategic planning and utilizing all possible deductions. Here are some key strategies for homeowners:

Leverage home office deductions: If you're self-employed or have a home office, take full advantage of the potential tax deductions related to this, including a portion of your house insurance, utilities, and home maintenance costs.
Consider rental property deductions: If you rent out part of your home or another property, remember to deduct insurance premiums and other related expenses, as these are considered business costs.
Capitalize on mortgage interest deductions: Paying interest on your home loan? Don't forget to claim mortgage interest tax deductions, which could be substantial.
Claim health-related home improvement costs: Deduct costs associated with health-necessitated home updates, such as installing ramps or handrails.
Deduct property taxes: Remember to deduct your property taxes up to $10,000, which could result in significant savings.^[3]
Utilize mortgage insurance deductions: If you're paying private mortgage insurance (PMI), be sure to claim this deduction, subject to income restrictions.
Consult a tax professional: To ensure you're not missing out on any potential tax benefits, consulting a tax professional can be wise. They can help you navigate complex tax laws and provide advice tailored to your specific situation.

In summary, being proactive about understanding your eligible tax deductions as a homeowner can lead to substantial savings on your tax return.

Properties impacted by disasters

If you file a claim that doesn’t cover the total damage following a federally declared disaster, you may be able to deduct the amount above what insurance pays. A federally declared disaster area is a region designated by the President for federal assistance after a major event like a hurricane, wildfire, flood, or earthquake. These declarations help provide relief for those affected.^[4]

Homeowners insurance tax considerations

If you want to get the most out of your tax return, it pays to do some research. Consult with your home insurance company and tax experts to determine the best ways to save. If you’re still looking for a great insurance policy for your house, The Zebra can help by providing accurate quotes from a number of top companies to help you find the best policy for your needs.

Start saving on your homeowners insurance premiums today

Home insurance tax FAQs

Can I claim my home insurance deductible on my taxes?

Personal homeowners insurance is not typically tax-deductible. However, there may be exceptions if you're using part of your home for business purposes or if you're renting out part of your property. Check with your tax advisor to be sure.

What homeowners' expenses are tax deductible?

Home improvements for medical reasons, such as entry ramps or railings, can be tax-deductible. However, most regular home improvements are not tax-deductible. Also, you can typically deduct up to $10,000 in property taxes on your federal income tax return. This includes state, local, and foreign real property taxes.

Do you get a bigger tax refund for owning a home?

Owning a home can increase your tax refund if you qualify for deductions like mortgage interest, property taxes (up to $10,000), and mortgage insurance (if your income is below the limit). However, these benefits only apply if you itemize deductions rather than taking the standard deduction, which is often higher for many taxpayers. Talk to your tax professional for specific details about your situation.

Sources:

About Schedule A, Itemized Deductions. IRS
Tax Tips for Employees Who Work at Home. Intuit turbotax
Tax benefits for homeowners. IRS

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