When it comes to the total cost of home ownership, you shouldn't forget about how much you pay each year in taxes and homeowner's insurance. However, were you aware of how your insurance can impact how much you pay in taxes? Here is what you need to know about the potential tax benefits.
Office Deductions
Do you work out of your home as part of your job, and have dedicated a space of your home for that very purpose? If so, then that means you can take some additional deductions from your taxes that you may not have thought of. You can actually take a portion of your home insurance as a write-off toward your business. The deduction should be equivalent to how much of your home is dedicated to business use, so you cannot deduct the whole amount.
For instance, if you have a 2,000 square foot home and you have a 200 square foot office space, then you can deduct 10% of your home insurance premiums as a business expense. Of course, this can only be done if you itemize your taxes and can actually write off your insurance premiums. If not, then it is not a way that you can save money,
Stolen Items
Did you have a break-in where items were stolen from your home? Even if you have insurance, you could end up claiming some of your losses as a tax deduction. You will definitely be able to write off that deductible that you end up spending for the insurance claim, and the depreciated value of items that were stolen and not replaced.
Damaged Items
Similar tax laws apply if you were to have your home damaged, due to an event like a house fire or weather related disaster. You'll get to write off your deductible, as well as any items that were damaged in the disaster and not replaced. Just keep in mind that anything that is fully replaced by your home insurance company cannot be written off as a deduction. If you are audited, your insurance provider has a record of what items they replaced, so you can get into some legal trouble by claiming them.
Navigating the tax implications caused from your insurance can be complicated. If you have any questions about how it will work with your home insurance, try reaching out to your insurance agent for advice. They know the details about these policies better than anybody, and can give you some tips as to how your insurance ties into your taxes.
For more information, reach out to insurance companies like Angel Auto Insurance.
