Can You Deduct Home Insurance on Your Taxes?

Home insurance premiums generally are not tax-deductible for a personal residence. However, there are specific situations where a portion, or even the full amount, of home insurance premiums can be deducted. These exceptions primarily involve using your home for business purposes or as a rental property.

Personal Residence Insurance

For most homeowners, insurance premiums paid for their primary residence are considered personal living expenses. The Internal Revenue Service (IRS) does not allow deductions for personal expenses, which includes costs like utilities, mortgage principal payments, and homeowners insurance.

The home is viewed as a personal asset, not an income-generating one. Tax deductions are typically reserved for expenses incurred in generating income or for specific itemized deductions permitted by tax law. Since personal homeowners insurance does not fall into these categories, it remains a non-deductible expense for the average homeowner.

Business Use of Home

A portion of home insurance premiums may become deductible if a part of your home is used for business. This often applies to self-employed individuals who qualify for the home office deduction. To meet the IRS criteria, the space must be used regularly and exclusively for business, and it must be either your principal place of business or a place where you regularly meet clients or customers.

The deductible amount is calculated based on the percentage of your home’s total square footage used for business. For example, if your home office occupies 10% of your home’s area, you may deduct 10% of your home insurance premium. The Tax Cuts and Jobs Act (TCJA) of 2017 suspended unreimbursed employee business expenses from 2018 through 2025, meaning this deduction primarily benefits self-employed individuals.

Rental Property Insurance

Insurance premiums for properties rented out to others are fully tax-deductible. The IRS considers these premiums an ordinary and necessary business expense incurred in generating rental income. This applies whether you rent out an entire property or a portion of your primary residence to tenants.

This deduction covers various types of insurance policies relevant to rental activities, such as landlord insurance, property insurance for rental units, and a proportional amount of homeowners insurance if part of your primary residence is rented.

Claiming the Deduction

Once eligibility for deducting home insurance is established, reporting these expenses on a tax return requires specific forms. Self-employed individuals claiming a home office deduction use IRS Form 8829, “Expenses for Business Use of Your Home.” The deductible amount from Form 8829 is then transferred to Schedule C (Form 1040), “Profit or Loss From Business (Sole Proprietorship),” where it is combined with other business expenses.

For rental property owners, insurance premiums and other related expenses are reported on Schedule E (Form 1040), “Supplemental Income and Loss.” This schedule is used to report income and expenses from rental real estate. Meticulous record-keeping, including insurance policy documents, premium payment receipts, and documentation supporting the business use percentage or rental activity, is essential to substantiate these deductions.