YOU ASK:

Is homeowners insurance tax deductible?

WE ANSWER:

The answer to this question can be YES or NO, depending on your particular homeowner situation. Usually, homeowners insurance is not tax deductible for people who use the properties they own for residence purposes. However, if you use your home for business or rental purposes, you are eligible for income tax deduction.

Homeowners Insurance and Tax Deduction

The money you put into home insurance premiums can lower your income tax at the end of the tax year if the property you own has been used for rental purposes. Likewise, if you have a home office set up and have been doing business from your home, you can qualify for income tax deduction.

Any property damage compensation is received tax-free so home owners can only get a tax deduction for property losses they have incurred which have not been covered by their policy.

Homeowners who have purchased their lodgings with a mortgage can qualify for a mortgage insurance premium tax deduction which is supposed to be a great money-saving tool. According to financial analysts, the mortgage insurance premium deduction measure, which was passed recently by Congress, allows a home owner to save up to $500 in taxes per annum. Note that this tax deduction only applies to new home owners and to people with a maximum annual gross income of $100,000.

Tax Deductions with Other Types of Insurance

Types of insurance that are tax-deductible include the following:

  • Dental insurance;
  • Medical insurance;
  • Health insurance - only for self-employed individuals, such as small business owners and independent contractors.
  • Business auto insurance - for workers who use their own car or truck for business purposes (any driving out of working hours is specifically excluded.)
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