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Is Home And Office Insurance Deductible From Self-Employed Taxes?

Picture this: you're running your own business from the comfort of your home office, setting your own hours and avoiding the daily commute. It's the self-employed dream, right? But when tax season rolls around, you might find yourself wondering, "Can I deduct my homeowners insurance?" In most cases, your homeowners' insurance for your primary residence is not tax-deductible. The premiums you pay to protect your home and its contents are typically considered personal expenses and don’t qualify as deductions on your federal income tax return. But if any part of your home is used for work, you can write off a portion of your home insurance from your SE tax. Homeowners' insurance is deductible for self-employed individuals who use a part of their home exclusively and regularly for business purposes. If you're a self-employed entrepreneur involved in real estate, you might own some of the properties you rent out. The good news is that you can generally deduct the cost of this insurance as a legitimate business expense when you report your rental income, along with other rental property tax deductions.

Table of contents

Key takeaways...Read more

When is home insurance tax deductible?...Read more

Are property taxes deductible?...Read more

Are condo fees tax deductible?...Read more

Is renters insurance deductible from 1099 taxes?...Read more

The home office deduction...Read more

Tax deductions for rental property owners...Read more

Key takeaways

Self-employed individuals can deduct home insurance premiums from their taxes if they work from home.
Homeowner insurance can also be a real estate tax deduction for rental property owners.
Many property-related expenses can be tax deductions for homeowners.

When is home insurance tax deductible?

First, let’s clear something up. “Home insurance deductible” (also known as homeowners insurance deductible) isn't the deductible you pay before your insurance kicks in; instead, it's the portion of your homeowners' insurance premium that you can subtract from your self-employment earnings when calculating your taxable income. Self-employed individuals usually have to estimate 1099 income before every tax year to make estimated tax payments. So, tax deductions play a very important role in reducing taxable income. An estimated tax calculator is the easiest way to total estimated taxes. Home insurance protects you in the event of damage or loss to your home or personal belongings in it. These losses can arise from various causes, including bad weather conditions like floods or tornadoes and criminal activities like theft or vandalism. So, is home insurance tax deductible? Yes, in two situations – self-employed individuals working from home or owning rental property. You’ll need to use the home office deduction to deduct home insurance for your workspace from 1099 taxes.

Infographic entitled When Home Insurance Becomes Tax Deductible describing situations when homeowners insurance is deductible.

If you operate a home-based business, the expenses related to the portion of your home used as your office, including home insurance, could be deductible. Let’s say you work as a freelance video editor from your home office and use 20% of your home exclusively for work. In this case, you can potentially deduct 20% of your home insurance premiums from your taxes. Sometimes, you might live in a home within a gated community. Certain communities have homeowner associations (HOA) to help the community maintain its shared facilities. If you’re part of an HOA, you’ll need to pay annual or monthly fees. Can you write off homeowners association fees? Unfortunately, HOA fees are not a tax deduction for most taxpayers. As per IRS guidelines, HOA fees can only qualify for tax deductions if you purchased your property with the intention of using it as a rental property. HOA fees are fully tax-deductible for Airbnb hosts as long as the property isn’t their primary place of residence. If the property serves both as a part-time residence and a rental, hosts only deduct the portion of HOA fees directly related to the rental business activities. It's crucial to accurately allocate these expenses for tax purposes, as misclassifying them can result in penalties or trigger an audit.

Are property taxes deductible?

Property taxes – those annual or semi-annual bills you receive from your local government to fund services like schools, road maintenance, and public safety – can be a substantial financial burden for homeowners. So, if you’re thinking, “Is property tax deductible?” The answer is that property taxes are typically deductible if you itemize your deductions on your federal tax return. In most cases, you can deduct real estate taxes in the tax year in which you make the payment. The Tax Cuts and Jobs Act (TCJA) implemented in 2018 capped the total deduction for state and local taxes, which includes property taxes. The limit is set at $10,000 (or $5,000 if you're married and filing separately). Keep in mind that property tax laws can vary between states, so it's a good idea to consult with a tax professional to ensure you're making the most of it.

Infographic entitled What Property is Tax-Deductible listing property with tax that’s deductible from real estate taxes.

Are condo fees tax deductible?

A lot of the time, condo fees and HOA fees are used interchangeably, but they do have a few differences. Condo fees are usually higher than HOA fees as the costs aren’t always equally shared by the community members. But they do have the same rules when it comes to taxes. You can deduct the fees if you rent out your condo or use some part of it for your business.

Is renters insurance deductible from 1099 taxes?

We know homeowners insurance is tax deductible, but what about renter’s insurance? Unlike homeowners insurance, renters insurance primarily covers personal property and personal liability. Renters insurance becomes tax-deductible in one specific scenario – when you're working from your apartment or rental home and have carved out a dedicated workspace solely for business purposes.

The home office deduction

Most self-employed individuals using their home for business can take the homeowner insurance deductible as a write-off from their taxes. But this expense is part of a larger write-off – the home office. There are certain boxes you need to check if you want to take the home office deduction. First, the space in your home that you're claiming as your home office should be all about business. It needs to be exclusively dedicated to work-related activities, and you should use it regularly, not just occasionally. Your home office should be your go-to place for business, or at least where you meet clients or customers regularly. If you have more than one business location, your home office should play a significant role in your overall operations. There are two exceptions to these rules. Suppose you operate a caregiving service from your residence. In that case, you’re eligible to claim deductions for expenses linked to the portion of your home that is utilized for providing this care. This applies even if you use the space for personal purposes during non-working hours. If your home office is used for storing inventory for a retail business, the IRS may allow you to deduct a part of that storage space. When it comes to crunching the numbers for the home office deduction, there are a couple of methods to choose from. There’s the regular method, where you calculate your actual expenses tied to your home office. You then figure out what percentage of your home is used for work and apply that percentage to your actual expenses to work out your deduction. So, if you're trying to write off a home insurance deductible or have a lot of home-related expenses, this method might be the best option for you. The simplified method keeps things, well, simple. You can claim $5 per square foot of your home office up to a max of 300 square feet, which gives you a maximum deduction of $1,500.

You claim the home office deduction on Form 8829. Recordkeeping is pretty important when taking this write-off because you’ll need to show the IRS adequate proof that you use your home office or work area exclusively for business. Save documents relating to:

Rent payments
Insurance
Home maintenance costs
Mortgage interest
Property taxes
Rent statements (if you don't own your home)
Total square footage of your home and office space
Phone costs
Utilities
How you calculated the percentage of your home used for business purposes
Business licenses
Purchase of your home (if you want to depreciate it)

There are a few things to remember when taking the home office deduction. Certain expenses like mortgage interest can only be claimed once on your taxes. If you deduct the interest as part of the home office deduction, you can’t deduct it again as an itemized deduction from your income taxes. You also can't claim home office expenses if they exceed your gross income – that's a definite no-go. But here's some good news: if you're using the regular expenses method for claiming the deductions, any leftover write-off amount doesn't just vanish into thin air. The IRS lets you carry it over to future tax returns. So, if your expenses are more than your income in one year, you can still benefit from those extra deductions in the following years.

Tax deductions for rental property owners

We mentioned earlier that home insurance premiums were tax deductible to landlords renting out their properties. If a rental property is used for personal purposes for any part of the year, only business use portion of the deductible amount can be written off. Rental income is reported on Schedule E (Form 1040). But that’s not all rental property owners can deduct from their taxes. Some common rental property tax deductions include:

Interest (mortgage, credit card, loans to improve property)
Repairs (paint jobs, plumbing, broken fixtures)
Maintenance (pest control, landscaping, HVAC)
Depreciation of property
Travel expenses
Legal and professional fees
Insurance
Employee costs

These tax deductions for rental property owners can mean major tax savings when paying self-employment taxes. Finding and managing these real estate tax deductions can be challenging, especially if you own multiple properties. FlyFin can help find these deductions using A.I. It can also calculate self-employment taxes and figure out your estimated tax payments using the built-in tax calculators. Expert CPAs also offer tax preparation and filing support on the app.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.