Is Homeowners Insurance Tax Deductible?

An HO-6 insurance policy provides protection to the internal structure of your condo, as well as your personal belongings and liability. When used in tandem with your building owner’s insurance plan, you can receive full coverage for every aspect of your condo.

In most cases, homeowners insurance is not tax deductible, meaning you won’t receive any premium-related tax breaks when filing with the IRS. However, that doesn’t mean you won’t receive any money back from the government when you own a home.

There are certain instances where you can receive tax breaks in relation to your home insurance if you keep a close eye on your expenses throughout the year and meet certain requirements.

Below, we cover several scenarios when home insurance is tax deductible. But keep in mind even if you qualify, you’ll still need to meet your home insurance deductible whenever you file a claim.

When is home insurance tax deductible?

There are several instances where you can receive a tax break on your home insurance, including if you own rental properties, run a home-based business, and when submitting a disaster-related claim.

1. For rental properties

If you're a landlord — no matter if you rent out multiple properties or just a spare bedroom — you can deduct your rental property’s home insurance when filing your taxes. While you’ll still need to pay taxes on the income you received as a landlord, you’ll be able to write off your premiums with a 1040 form.

Interested in becoming a landlord but don't know where to start? Our guide to landlord insurance will help put you on the right path.

2. For home-based businesses 

While it seems like just about everyone is hopping on the remote-work train these days, to take advantage of this deduction, you’ll need to be both working from home and self-employed.

To determine how much of your homeowners insurance premium is tax deductible when operating a home-based business, you’ll need to figure out what percentage of your home insurance goes to protecting your home office. Get ready to dust off that tape measurer! You can do this by comparing the square footage of your office to your home’s total size. Then, you can deduct that percentage from your taxes as a business expense.

However, most home insurance providers will require homeowners running a business in their homes to purchase additional coverage to protect their tech and liability. But every home business is different, so make sure you chat with your agent to ensure you have enough coverage for your needs.

3. In the case of a disaster 

When you buy a homeowners insurance policy, you expect coverage from major natural disasters (and as long as you have the right riders, you will be). But did you know you can also deduct those losses from your taxes, as long as they came from a federally declared natural disaster such as a hurricane or other catastrophe?

There are several stipulations to this tax break, but bottom line: If your insurance doesn’t cover the entire amount you have to pay to repair or replace what's damaged during a disaster, you can typically write the rest off.

4. When you buy mortgage points

When purchasing a home, you likely were given the option of buying mortgage points through your lender. Mortgage points, or upfront payment of a percentage of your mortgage to lower your interest rate, are tax deductible. However, you’ll only be able to take advantage of this deduction in the year that you buy your home.

Other deductions

If you itemize your deductions when filing your taxes, you have a few other options for getting parts of your home insurance deducted.

5. Energy efficiency: You can receive a tax break (and reduce your utilities) by upgrading your appliances to energy-efficient versions.
6. Home improvement: If you upgrade your home, such as adding in a pool or upgrading your HVAC system, you can deduct these upgrades from your taxes when you sell your home.
7. Mortgage interest: This deduction allows you to list your yearly mortgage interest on your tax forms and receive a break depending on how much interest you pay.
8. Property tax: When filing your taxes, you can list your property tax amounts as an itemized deduction

What does a tax write-off mean?

A tax write-off is a deduction you list on your tax return to lower your taxable income, allowing you to pay a smaller amount of taxes back to the federal government. Tax write-offs, such as those listed above, must be approved by the IRS in order to reduce your taxable income.

Is hazard insurance tax deductible?

Hazard insurance, when bought for your main property, is not tax deductible. However, if you bought this extra protection for your rental property, you’ll be able to deduct it as a business expense.

Taxes, like home insurance, can be complicated. But luckily, you can make things easier on yourself by working with companies who get it. Here at Hippo, we have a team of insurance experts on call to help you understand all the ins and outs of insurance with ease. Because after all, your dream home deserves the best protection possible.

For more information on homeowners insurance, and to ensure you have the coverage you need, give us a call.