According to the Internal Revenue Service (IRS), homeowners insurance installments are never tax-deductible, nor premiums are. This means that you can’t claim any return on funds that are due to your insurer and come directly from it. However, it will be possible to specify some out-of-your-pocket expenses that can be detracted from taxes, so that you have a substantial saving in the long run.
You can discharge from taxes damages and losses that, because of different reasons, aren’t fully reimbursed from the company, and that you will pay on your own, so whenever there is a lack toward your coverage. However, this is true if you are living in a declared federal disaster area, and you can claim toward the percentage amount, for instance, a hurricane deductible, which is right the portion of coverage that you are bound to spend as per the policy agreement. These contingencies are known as ‘casualty loss deductions’: the value of the loss must ideally first be estimated by an appraiser, who will help with figuring the exact amount you are eligible to claim for.
Let’s say you arranged with your insurer a windstorm deductible of 2%: if the loss occurs, and the home was insured for $200,000, you will be called to spend $4,000 while the insurance company the remainder $196,000. Those $4,000 are tax-deductible, of an amount that varies upon different factors, but that in some cases can be the whole sum. If the deductible is too low (in proportion to loss), it is likely to be only partially written off.
Other possible situations where you are eligible to deduct your expenses are:
-if you use your entire home or just a room for business-related activities, you may assign that space, quantified in square footage, for that specific purpose, so as to be excluded from your standard homeowner’s insurance. In fact, the underlying policy doesn’t offer coverage for houses where some business takes place, but only for living in;
-if you’re a living-in landlord and receive revenues from the rental of some rooms, your homeowner’s insurance on the space occupied by tenants becomes tax-deductible. The same would be if you owned more properties, but used entirely and exclusively for rental income: since there are business expenses, those can be tax-deductible.
As for personal properties losses, there is a formula to determine tax deductibility: assume that you were robbed off a jewel worth $20,000, but it is only covered for $5,000. So you have a $15,000 loss and might want to claim a deduction for it. Will you have any return?
Suppose that your annual gross income is $100,000, then your deduction will be the $15,000 loss minus $100 (as a rule) minus $10,000 (that is the 10 percent of your income):
$15,000- $100- 10% (income=$100,000)=$4,900 and this is your claimable amount.
Doing some research pays off at last.