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While your homeowners insurance premiums may be included in your property payments, they are considered nondeductible expenses according to the Internal Revenue Service (IRS). That means you unfortunately cannot itemize any payments for home insurance - including fire, theft, and comprehensive coverage; nor title insurance as deductions - on your tax return.

Key Takeaways

  • Homeowners' insurance is a necessity to make sure your home and property are protected against fire, weather, theft, or liability.
  • Homeowner's insurance premiums are typically not tax-deductible.
  • In special cases, however, they might be tax deductible - for instance PMI or if you are a landlord and it is a business expense.

Cases When You Can Deduct Homeowners Insurance

There are, however, two special instances in which you can likely deduct insurance payments from your home.

  1. If you use your home or part of it for business, you may be able to use the square footage of your qualified home office space that is used for business as a percentage of the total home square footage to allocate to your homeowners insurance expense.
  2. If you're a landlord and claim rental income on your home, your homeowners insurance on the portion of the property used as a rental becomes tax-deductible. When you own several properties and those properties are used only for rental income, then all of the homeowners insurance is tax-deductible. (Note that a landlord cannot subsequently deduct the premiums he or she pays for his or her own residence on their tax returns).

Consult your tax preparer for more details on how to deduct homeowners insurance.

The Special Case: Private Mortgage Insurance

Premium payments for your private mortgage insurance (PMI) can be tax-deductible, and you can claim them on your tax return. If you are buying a home but can't provide at least a 20% down payment of the home's market value, PMI allows you to find financing and lenders to protect yourself against possible default.

PMI will typically cost between 0.5% and 1% of the entire mortgage loan amount annually, which can raise a mortgage payment by quite a bit. Let's say, for example, that you had a 1% PMI fee on a $200,000 loan. That fee would add approximately $2,000 a year, or $166 each month, to the cost of your mortgage. And a potential homebuyer might have to even pay more since, according to Zillow, the median listing price of U.S. homes was $275,000 as of December 2018.

The two requirements to deduct PMI from your taxes are that

  1. the insurance contract was issued after the year 2006, and that
  2. your adjusted gross income (AGI) on Form 1040, line 38, is less than $54,500 ($109,000 for married couples filing jointly).