Home is where the tax deductions are! If you’re a Florida homeowner, you’ve likely wondered, “Is my homeowner’s insurance tax
You’re not alone. In fact, this is one of the most common questions Florida homeowners ask as they prepare to file their taxes. So … is homeowner’s insurance tax deductible? Let’s take a look.
Is My Homeowner’s Insurance Tax Deductible?
In most cases, unfortunately, homeowner’s insurance is not tax deductible. While homeowner’s insurance is included with your house payments, the Internal Revenue Service (IRS) classifies it as a nondeductible expense, which means it cannot be deducted on your federal income tax return.
There Are Two Exceptions...
1. You Use Your Home for Business
If you have a home office and qualify for the home business-related expenses deduction, a portion of your homeowner’s
insurance will be tax deductible. The deduction is equivalent to the percentage of housing expenses allocated to your home office. For example, if you allocate 10 percent of your housing expenses to your home office, you'll be able to deduct 10 percent
of your homeowner’s insurance premium.
However, if you have a home-based business, we recommend that you add an endorsement to your homeowner’s insurance policy or purchase business insurance to provide adequate coverage.
2. You Own a Rental Property
If you claim rental income on your house, homeowner’s insurance is tax deductible on the portion of the property that is rented out. If you own a property that is only used for rental income, all of the homeowner’s insurance premiums paid
toward that property would be tax deductible.
Other Tax Breaks and Deductions for Florida Homeowners
While homeowner’s insurance not being tax deductible may not be the happiest news for most, there is a silver lining, thanks to the following tax breaks and deductions:
REMINDER: Tax Day is Tuesday, April 18, 2017
Mortgage Interest Deduction
The mortgage interest deduction is one of the biggest home-related tax deductions and is available to Florida homeowners
who itemize their taxes.
If you paid more than $600 in annual interest (including points and mortgage insurance premiums), you should have received a Form 1098 from your mortgage lender.
The form is typically included with your monthly mortgage statement.
If you paid less than $600, check your year-end mortgage statement and look for the year-to-date amount of interest paid. That will indicate how much mortgage interest you paid in 2016.
Pay close attention to boxes 1, 6 and 10 on your Form 1098
. You will need these figures to deduct mortgage insurance on your tax return.
Residential Energy-Efficient Property Tax Credit
Did you make your home more energy efficient in 2016? If so, you may qualify for the residential energy-efficient property tax credit,
equal to 30 percent of the expenditures made through Dec. 31, 2016, for the following qualifying improvements:
- Solar electric systems
- Solar water heaters
- Fuel cell property ($500 credit limit for each one-half kilowatt of capacity of the property)
- Small wind energy property
- Geothermal heat pumps
To apply, complete Form 5695 and attach it to your Form
Non-Business Energy Property Credit
Similar to the residential energy-efficient property credit, the non-business energy property credit allows Florida
homeowners to offset some of the costs of qualified energy efficiency improvements, such as insulation, specific roofing materials and exterior doors, as well as windows and skylights. In addition, the credit can help offset residential energy property
costs for select heat pumps, water heaters, furnaces, boilers, central air conditioning systems, stoves that use biomass fuel, and advanced circulating fans for natural gas, propane or oil furnaces.
To apply, complete Form 5695 and attach it to your Form 1040.
Home Business-Related Expenses
If you use your home for business, you may be eligible to deduct related expenses. Since January 1, 2013,
Florida homeowners have had access to a simplified option for calculating the business
use of their home.
Simplified option highlights:
- Standard deduction of $5 per square foot of home used for business (maximum of 300 square feet)
- Allowable home-related itemized deductions (such as mortgage interest or real estate taxes) claimed in full on Schedule A
- No home depreciation deduction or later recapture of depreciation for the years the simplified option is used
To apply, complete Form 8829 and file it with Schedule C (Form 1040).
Moved to start a new job in 2016? You may be able to deduct reasonable moving expenses if you meet the following requirements:
- Your new workplace is at least 50 miles farther from your old home than your old job location was. If you had no previous workplace, your new job location must be at least 50 miles from your old home.
- You must have worked full time for at least 39 weeks during the first year in your new location.
To apply, complete Form 3903 and attach it to your Form 1040.
Casualty, Disaster and Theft Loss
For the first time in more than a decade, Florida experienced hurricane landfalls in 2016. Was your home impacted by a hurricane, a different disaster, or theft in 2016? If the loss was the result of a sudden, unexpected or unusual event, you may be able
to deduct uncompensated disaster and theft losses relating to your home and valuables.
To calculate the deductible loss, subtract the adjusted basis of your property or the decrease in fair market value of your property as a result of the casualty. Whether it’s a casualty or theft loss, you must reduce it by any salvage value or home
insurance reimbursement you received or expect to receive.
To apply, complete Form 1040, Schedule A (or Form 1040NR, Schedule A if you are a nonresident) and Form 4684.
While homeowner’s insurance isn’t exactly tax deductible, there are several other tax breaks and deductions available to Florida homeowners. Which ones do you qualify for?