Homeowner's insurance deductible?

Question

Hi, I'm wondering if you all consider home owner's insurance as tax deduction on your rentals? I'm reviewing my last three 3 years of returns where I worked with two different CPAs. I didn't notice this before but I noticed that both CPAs left the Insurance line on Schedule E blank, but they entered line items for other common deductibles such as mortgage interest, property tax, depreciation, repairs etc. I researched a little bit on insurance and it seems like I can deduct that as well but I'm not sure if there's a catch or if there is reason why it wasn't included. I have an escrow account so the bank is paying both the property tax and insurance. I'll definitely ask my CPA next year when they do my taxes.

I also came across this article http://finance.zacks.com/can-deduct-homeowner-insu...

that mentions "But if you attempt to write off your homeowners insurance premiums, this can trigger problems with the Internal Revenue Service."

Not exactly sure what it means by "problems" with the IRS.

I also came across this article http://finance.zacks.com/can-deduct-homeowner-insu...

that mentions "But if you attempt to write off your homeowners insurance premiums, this can trigger problems with the Internal Revenue Service."

Not exactly sure what it means by "problems" with the IRS.

Joseph M. · Answer

Hi Liwen, I would think about finding a new CPA, possibly someone who is a real-estate investor. That's a pretty major mistake to make and if they've overlooked that, you can only imagine what else they didn't deduct.

Liwen Gu · Answer

Thanks @Carl Fischer and @James Triano! I didn't realize there was a difference in terminology between Homeowner's policy and Landlord policy. I will review my Stillwater insurance documents and make sure if it's for the right policy (it probably is, I just never paid much attention to it and never provided it to the accountants which is probably why they left it blank and didn't ask about it)

James Triano · Answer

@Liwen Gu

Your personal homeowner's insurance is not tax deductible.

However, if you own a rental property and have a Landlord Policy (which you definitely should have), this is a tax deductible expense.  This is simply a cost of doing business.  Since you reference a Schedule E, I'm assuming it's a rental and you should definitely have this line on your Schedule E.

Carl Fischer · Answer

Rental property insurance is not called "home owners" policy. it may cause problems with claims as well as IRS. property insurance is deductible but your residence " home owner" policy is not.   Work this issue with your insurance carrier/agent.

Liwen Gu · Answer

Thanks Jake, yes it's specifically insurance on my rentals.

Jake Hottenrott · Answer

yep, that's definitely a deduction assuming you mean insurance that covers your rentals and not your primary residence.