landlord insurance premium tax deductible?

Question

From what I understand, you can deduct the entire premium as it is an expense to run the rental property. With prices going up so much, if this lowers your cashflow too much, I feel like you may not look profitable in the eyes of a lender. Am I missing something? Thanks

Jonathan Bock · Answer

Truth if you can not pass through your increasing expenditures with rent growth you will make less money comparatively.

Jonathan Bock, CPA

Paul De Luca · Answer

Yes, property insurance is an operating expense and decreases your NOI and cash flow.

Max Emory · Answer

Hey @Mario Morales, yep yep. What everyone else here has said. It's deductible. It shows up on your income statement (P&L) and goes against whatever income the property generates.

When you reference lending, if you're speaking about lending for a specific property, if the expenses for a property kill the income the property generates the DTI for that property will most likely be too low to qualify for most lenders.

If you're talking about qualifying for general lending using the income generated from a rental portfolio...

From what I've seen both as an REI myself and the owner of a bookkeeping firm that serves REIs, it's very hard to qualify for lending using a rental portfolio's income. IRR from an investment standpoint is usually good but the cashflow that you can use to qualify for lending is usually too low. That's where the active businesses that have higher cashflow come into play (flipping/wholesaling/etc).

Happy to chat via DM if you want to expand on this.

Hope this helps!

Basit Siddiqi · Answer

Yes, Insurance is a tax write-off for a rental property.It is also true, that if expenses are higher than your income(not including depreciation) that it may lower your DTI Ratio.

Conner Olsen · Answer

To my understanding it is an expense!

landlord insurance premium tax deductible?

landlord insurance premium tax deductible?

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