If you own a home-based business, you have a variety of tax deductions you can use, some of which you may not even have considered. With the cost of homeowners insurance constantly going up, there are only so many discounts you can apply to make it more affordable. Including your homeowners insurance premiums as a tax deduction may balance out the equation. There are several exceptions that you can consider if you want to use your homeowners insurance premiums as a tax deduction. This article discusses some such exceptions to help you get your homeowners insurance premiums off your taxes.
Homeowners Insurance Plans for Small Business Owners
Homeowners insurance protects you from financial loss. If you operate your business from your home, you will normally have a designated area that is used strictly to operate your business. The square footage of that area and its upkeep can be claimed as a deduction on your taxes. This includes the part of your insurance premium that covers that particular area. You will need to determine what percentage of your premium that applies to the area and include a copy of your insurance policy’s declarations page so your tax professional can take advantage of the deduction.
How Can Homeowners Insurance Be Tax-Deductible?
If you are required to carry homeowners insurance due to owing on a mortgage or home equity loan, it means that you have no choice but to keep your home covered. This in itself may be enough, according to some insurance providers, to qualify at least part of your premium as a tax deduction. This may be especially true if a federally recognized disaster damages your home. Having to repair or replace your home can be costly. There are times when your homeowners policy may not be enough. Any amount you pay over what your policy doesn’t cover may be considered a tax deduction.
Which Exceptions Can Make Your Homeowners Insurance Tax-Deductible?
Another exception that may allow you to tax part of your homeowners insurance premiums off of your taxes is if you rent out part of your home. Renting a room to a family member or college student denotes a business transaction, especially if they are paying you cash for the opportunity. Keeping an accurate record of all the money that changes hands (use receipts) and a copy of your declarations page will help your tax professionals work out the details.
Saving money is something we all try and do. When you have saved as much as you can on your homeowners insurance premiums, you may be able to save a little more if you can find a way to take a portion of your premiums off on your yearly taxes. Understanding what can be claimed as a deduction is a great place to start. Call our insurance professionals at Advanced Insurance Group at your earliest convenience, and we can answer your questions related to homeowners insurance.