Generally, homeowners insurance is not tax-deductible. It's confusing: Even though your premiums may be included in your mortgage payments (which you do get a tax break on), they are considered nondeductible expenses by 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 on your tax return.
- Homeowners insurance premiums are typically not tax-deductible.
- In special cases, however, they might be wholly or partially tax-deductible as a business expense: for instance, if you are a landlord, getting rental income from the property, or you use part of your home as an office.
How Homeowners Insurance Can Be Tax-Deductible
There are, however, two special instances in which you can likely deduct insurance payments from your home.
- If you use your home or part of it for business. You may be able to take the square footage of your qualified home office space (or the part allocated for working in) as a percentage of the total home square footage; you'd apply that percentage to your premium, and deduct the resulting figure as a business expense.
- 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 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.
Landlords cannot subsequently deduct the homeowners insurance premiums they pay for their own residences on their tax returns.
The Bottom Line
Homeowners insurance is a necessity to make sure your home, property, and possessions are protected against fire, weather, theft, or liability. In fact, if you're taking out a mortgage, many lenders require you to have a policy. So, if even if it doesn't carry a tax break with it, homeowners insurance is worth the cost.