Homeowners insurance is not tax-deductible, nor are the monthly premiums, even if they're included with your mortgage payments. Unfortunately, the Internal Revenue Service (IRS) considers 澳洲幸运5官方开奖结果体彩网:homeowners insurance a nondeductible expense.

In other words, homeowners cannot 澳洲幸运5官方开奖结果体彩网:itemize the payments for home insurance—including fire, theft, and comprehensive coverage—nor 澳洲幸运5官方开奖结果体彩网:title insurance on their tax return.

Homeowners Insurance Tax Treatment

A homeowners insurance policy offers protection against potential damages to one's home. In addition, it typically covers a homeowner's driveway, fence, garden shed, and garage. In other words, if your property is damaged by a covered event or peril, the insurer will pay you according to the🅺🌱 policy.

The IRS offers homeowners 澳洲幸运5官方开奖结果体彩网:tax deductions, which are amounts that reduce your taxable income when you file your tax return. However, the IRS stipulates that several home expenses are considered nondeductible payments, including:

• Homeowners insurance, such as fire, comprehensive policies, and title insurance
• Cost of utilities, such as gas, water, and electricity
• Homeowners and condominium association fees
• Home repairs and upgrades

If you took out a mortgage loan, your payments to your mortgage lender are not tax deductible either. However, your state and local 澳洲幸运5官方开奖结果体彩网:realღ estate𓄧 taxes might be deductible. Also, the mortgage interest paid on a mortgage loan can usually be deducted in the tax year it was paid to the lender.

Homeowners Insurance Coverage for Small Business ඣOwners

If you run a small business on your property—like a lawn care or gardening business—your homeowners insurance might cover up to a couple of thousand dollars. If you operate a business on your property, be sure to ask your homeowners insurance company upfront whether it's covered or not.

If you run a larger business out of your home, it likely will not be covered, and you would need to take out a business insurance policy. 🌠For example, if you operate a daycare in your house, your homeowners insurance policy would most likely require you to take out a commercial policy for your business.

How Homeowners Insurance Can Be Tax-Deductible

There are two special instances i🔯n which you can likely deduct insuraꦉnce payments from your home.

1. If you use your home or part of it for business. You may be able to take what the IRS calls a home office tax deduction. You calculate it by taking the square footage of your qualified home office space—the part you've allocated for work—as a percentage of the total home square footage. Next, apply that percentage to your premium and deduct the resulting figure as a business expense.
2. If you're a landlord and receive rental income from your home. Your homeowners insurance on the portion of the property used as a rental 澳洲幸运5官方开奖结果体彩网:becomes tax-deductible. When you own several properties used only for rental income, all homeowners insurance is tax-deductible.

Frequently Asked Questions (FAQs)

The Bottom Line

Homeowners insurance helps ensure your home, property, and possessions are protected against fire, weather, theft, or liability. If you take out a mortgage, many lenders require you to have homeowners insurance. In other words, homeowne🌜rs insurance might be worth the cost even without the tax deduction.