Is homeowners insurance tax deductible? What most buyers miss

What you’ll learn ✅

• What homeowners insurance is and how it differs from mortgage insurance

• How tax deductions usually work

• When and why homeowners insurance might be deductible

• Which common tax deductions are available

Homeowners insurance is there to protect what’s likely your largest asset — your house. It shields you financially from events like fires, strong winds, and thefts. But it adds to the total cost of owning a home. When tax season rolls around, homeowners might wonder if homeowners insurance is tax deductible.

Not every homeownership cost is deductible. In fact, most of them are sunk costs, meaning they’re valuable but not tax-favored. But understanding deductions helps you budget and avoid disappointment come tax time.

In this guide, we’ll explain homeowners insurance deductions so you can figure out whether they apply to you. Plus, we’ll explore more common home deductions that may help you lower your total taxable amount.

What’s the difference between homeowners insurance and mortgage insurance?

Both homeowners and mortgage insurance protect buyers and their lenders from financial risk, but they cover different things. Here’s a quick comparison: 

• Homeowners insurance covers you in the event of damage or disaster. For example, if a fire damages your kitchen or a storm rips off sections of your siding, this insurance can help fund repairs and replacements.

• Mortgage insurance protects lenders if homeowners default on their loan. The two most common types are private mortgage insurance (PMI) and mortgage insurance premiums (MIP). This reduces a lender’s risk, letting them approve loans without large up-front payments.

Unlike homeowners insurance, mortgage insurance is sometimes tax deductible if you forego the standard deduction and opt to itemize your return. But this is always subject to income limits and legislative changes.

Here’s a breakdown of the differences between these two insurance types:

What’s a tax deduction?

A tax deduction reduces the amount of your total income you have to pay taxes on. If you’re eligible for deductions, they can lower that amount and possibly reduce what you owe the IRS.

There are two main types of deductions, standard and itemized, and you can only choose one. Here’s the difference between the two:

1. Standard deduction: A flat amount based on your filing status. Many people take the standard deduction because it’s simple and often leads to a lower tax bill than itemizing.

2. Itemized deductions: Based on specific deductible expenses such as mortgage interest, charitable contributions, and medical expenses. To make this option worth it, your itemized total must exceed the standard deduction.

Is property insurance tax deductible?

For a standard primary residence, the short answer is no. While there are ways to take a tax deduction for homeowners insurance, they often don’t apply to a home you live in. Insurance premiums are considered a personal expense — necessary but generally treated as a sunk cost from a tax perspective.

So when can you claim homeowners insurance on taxes? Here are the possible exceptions:

• If you rent out your home (or part of it): Because it's considered a business expense, the portion of your insurance allocated to rental use is usually deductible against your rental income.

• If you’re self-employed: The portion of your homeowners insurance that’s tied to your home office may be deductible.

Think of your house like your car. Homeowners insurance is like gas and maintenance — it keeps your home up and running. With a car, you can take deductions for business mileage, but if the vehicle is only for personal use, you can’t. Your home is the same way. You only get a tax break if there’s a business or rental use tied to it.

While homeowners insurance usually isn’t tax deductible for primary residences, it’s still an essential part of protecting your investment — and one of the core costs of homeownership. That’s why it’s important to understand your full monthly payment upfront.

At Better, we make it easy to see the complete picture. Our online tools let you estimate your mortgage payment, property taxes, and homeowners insurance in one place — so there are no surprises after you close.

...in as little as 3 minutes – no credit impact

Seven tax deductions for homeowners

Here are the most common deductions, from rental and home office deductions to property taxes and mortgage premiums.

1. Rental income deductions

You can usually deduct homeowners insurance if you rent out your home or a second house. This typically includes expenses from your rental income, including utilities and maintenance that apply to the area.

This is classic business-expense territory. You’re deducting ordinary and necessary costs to produce rental income. Just make sure you keep accurate records, especially if you only rent out certain rooms or only get rental income for part of the year.

2. Home office deductions

You can often deduct homeowners insurance if you work from home. 

If you’re self-employed and regularly use part of your home exclusively for business, you might qualify for the home office deduction. You need to dedicate property space and utilities to manage your job and keep income flowing, so a home office qualifies as a business expense.

3. Mortgage interest deduction

If you itemize deductions, you can sometimes deduct mortgage interest up to certain limits. This can save you a lot of money in the early years, when interest makes up a large share of your monthly mortgage payments.

4. Property tax deduction

When you itemize, you can sometimes deduct property taxes. This is subject to the overall state-and-local-tax cap, and local laws may impact it further, so it’s best to ask a professional for more information.

5. Mortgage insurance premiums

Depending on the tax year, you may be able to deduct mortgage insurance premiums (both PMI and MIP). This counts as a mortgage-related cost if you claim itemized deductions. They’re subject to income thresholds and legislative changes, so always verify your eligibility before filing.

6. Points paid on a purchase or refinance

If you paid mortgage points to reduce your interest rate, you might be able to deduct some or all of these costs. For a first-time mortgage, you must do this in the year you paid, but for refinancing, you do this over the life of the loan.

7. Medically necessary home improvements

You can deduct certain home improvements as medical expenses, such as installing medical equipment and making accessibility modifications. These improvements must not increase the property value or exceed current thresholds. 

Get transparent answers and a Better deal on your mortgage

Is insurance on a home tax deductible? In most cases, no. But there are other ways to reduce your overall homeownership costs, starting with securing a competitive mortgage rate.

Better has interest rates that are below national average¹, and when you work with Better, you can compare rates, explore loan options, and see how different terms impact your monthly payment over the life of your loan. Even a small difference in rate can mean meaningful savings over time. 

Better’s fully digital platform makes it easy to apply, lock your rate, and track your homebuying journey from one streamlined dashboard. And if questions come up along the way, our team is available 24/7 to help guide you forward.

Get pre-approved online in as little as three minutes, and move forward comfortably with Better.

...in as little as 3 minutes – no credit impact

FAQ

Are home insurance premiums tax deductible?

Usually no, but there are exceptions. Homeowners insurance on your primary residence isn’t generally tax deductible because it's considered a personal expense. But you might be able to deduct a proportional share of your homeowners insurance if your home generates income through rentals or a self-owned business.

How do you calculate home office deductions?

First, confirm the space is used exclusively and regularly for self-employment purposes. Then choose:

• The simplified method: Square footage x $5, up to $1,500 

• The actual expense method: Deducting a percentage of home costs and homeowners insurance based on the office’s share of your home’s total square footage

What other homeowner expenses may be tax deductible if insurance isn’t?

If you can’t deduct home insurance premiums, you can sometimes still take deductions for property taxes, home office costs, and rental property expenses. 

This article is for informational purposes. It’s not tax advice. Your situation might be unique, so consider speaking with a tax professional for personalized guidance.

¹Based on a comparison of average note rates. Better Mortgage’s average rate of 6.56% reflects the mean note rate for all funded 30-year fixed-rate mortgage loans originated by Better Mortgage Corporation between January 1, 2025 and December 31, 2025, calculated using internal loan data. The national average rate of 6.66% is based on Bankrate’s published 2025 annual average U.S. 30-year fixed mortgage rate, derived from nationwide lender survey data. Comparison is for informational purposes only and does not represent an advertised rate or guarantee of savings. Individual rates may vary based on market conditions, credit profile, loan characteristics, and other factors. Source: Bankrate historical mortgage rate data.