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Generally, insurance policies, like a health insurance policy, are tax-deductible. This means the premiums that you pay for your health insurance policy are eligible for a tax deduction. However, the premium that you pay for your home insurance policy is not tax-deductible. This is because the premiums that you pay for your home insurance policy is considered as a non-deductible expense as your home is used for personal purpose i.e. for your living.
So, what does this mean to a homeowner? Well, this means, unfortunately, you cannot itemize the payments that you pay for your home insurance policy against theft, fire, and other losses.
A home insurance policy protects against any potential damages to your home and its other included areas like driveway, garden, fence, garage, and shed.
It worth approximately nothing if you run a very small business in your home such as the business of gardening or lawn care. In such cases, your home insurance may provide coverage for up to some amount. So, if you run a business on your residential property then it is suggested to tell your insurance provider upfront and may ask whether it is covered in the policy or not.
However, if you run a large business in your home, such as you are running a day-care, then it will most likely not be covered. In such a case, you will need to take a specific insurance policy for business. So, for any business on your residential property, you will be required to purchase a commercial insurance policy.
Some of the points to consider about a home insurance plan are:
There are two special situations when you may get a tax deduction from your home insurance policy:
The Bottom Line:
A home insurance policy is a necessity for making sure that your property, home, and possessions are safeguarded against weather, fire, liability, or theft. When you are taking out the home mortgage, then many lenders may require you to have a home insurance policy. So, even if a home insurance policy does not carry any tax benefit in it, it has several other advantages that are worth the cost that you are paying for it. So, do not just run behind the tax-benefits or tax-deductions instead see the benefits that are offered by your home insurance policy.