Is Homeowners Insurance Tax Deductible?

Homeowners enjoy many tax deductions, but property insurance isn't one of them in most case.
i David Sacks/Lifesize/Getty Images

Homeowners enjoy a number of tax benefits and deductions at tax time, but unless you home includes rental property, you're out of luck. The Internal Revenue Service allows only private mortgage insurance to be deducted, not homeowner's, flood or title insurance.

Rental Exceptions

If you are a landlord and claim rental income on your property, the IRS will allow you to deduct property insurance as a business expense on the portion of the home used for rental. If you own other homes that are used exclusively as rental property, all of the property insurance is deductible.

Business Use

If part of your home is used for business purposes, you may be able to deduct a portion of the homeowner's insurance based on the business-use area of the home. The calculations are best done by your accountant to ensure that your deduction is correct and legal, and you may also combine portions of other household expenses such as a utilities, property taxes and other expenses.

Theft or Casualty Loss Deduction

If you make a claim with your homeowner's insurance company for theft, damage or other casualty, you may be able to deduct the difference between your insurance settlement and the actual cost of the loss. This can happen when your insurance is not sufficient to cover losses, and may include any out-of-pocket deductible.

Itemized Returns

In order to take advantage of any eligible insurance deductions, you must itemize them on your tax return. The IRS allows standard tax deductions for homeowners if you choose not to itemize, so it's worth your while to consult with your accountant to see if whether an itemized or standard deduction works in your favor.

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