On My Taxes, Can I Write Off My Homeowner’s Insurance Premium?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

There are dozens of common deductions that homeowners can use to offset their living costs. If you're one of the millions of Americans who pays homeowner's insurance premiums, you're probably wondering whether you can deduct them on your annual tax return. After all, the IRS makes a generous provision for homeowners who make mortgage payments every month. The Mortgage Interest Tax Deduction is one of the most important deductions that regular taxpayers have at their disposal. Every year, it saves the average middle-class family hundreds of dollars in tax outlays and keeps thousands of struggling families in their homes.

Unfortunately, the IRS doesn't make a similar allowance for the cost of homeowner's insurance premiums. If you own your own home, it's likely that you'll need to pay the full cost of homeowner's insurance out of your own pocket. This is because the IRS considers homeowner's insurance to be a "regular" living cost. In essence, current U.S. tax regulations treat these expenses like food and clothing costs rather than housing costs.

In certain circumstances, you may be able to deduct a fraction of your homeowner's insurance costs from your gross taxable income. While it's unlikely that you'll be able to deduct the full cost of your annual premiums, this deduction could be enough to improve your family's overall financial health by a significant margin.

Most taxpayers who are able to deduct a portion of their homeowner's insurance costs from their gross income figures can do so because they work from home. The IRS permits individuals who maintain a home office to offset a portion of their homeowner's insurance costs based on the square footage of their houses' "business areas." Of course, the applicable work space must be used primarily for business purposes: It can't be a den, living room or kitchen that occasionally serves as a makeshift workstation.

If you work from home, be sure to account for all of the space that you use for business purposes. For instance, you can add together the square footage of your dedicated home office as well as that of an adjacent space that you use for conferencing or client meetings. To find the dollar amount that you're able to claim as a deduction, divide the total square footage of your house by the square footage of your business area. Then, multiply this fractional number by your total annual homeowner's insurance premium and deduct the product from your total taxable income.

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