Is Home Insurance Tax Deductible

1. Mortgage points deduction

What are mortgage points? Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. One point typically costs 1% of your total loan amount. Essentially, you are “prepaying” interest to save money over the life of the loan.

How do tax deductions work for mortgage points? Because points are considered prepaid interest, they are generally deductible. If you meet certain IRS criteria—such as the home being your primary residence and the points being a common practice in your area—you can often deduct the full cost of the points in the year you paid them. For asset-rich individuals seeking for real estate investments, this can provide a substantial one-time tax break in the year of purchase.

2. Mortgage interest deduction

This remains the “holy grail” of homeowner tax breaks. In 2026, you can deduct the interest paid on the first $750,000 of mortgage debt ($375,000 if married filing separately). If you purchased your home before December 16, 2017, you may still be “grandfathered” into the higher $1 million limit. This deduction is a major reason why many homeowners choose to itemize rather than take the standard deduction.

3. Property tax deduction

A massive change for 2026 is the expansion of the State and Local Tax (SALT) deduction. Under the OBBB Act, the previous $10,000 cap has been raised significantly. For the 2026 tax year, homeowners can now deduct up to $40,400 in combined state and local taxes, including real estate taxes. This is a game-changer for retirees and investors in high-tax states, providing a level of relief that hasn’t been seen in years.

4. Rental deductions

If you have transitioned from a resident to a landlord, your tax situation changes. For rental properties, almost every expense—from the mortgage insurance premium deduction to the full homeowners insurance policy—is deductible against the rental income you receive. This is why real estate investors often see such high “after-tax” returns on their portfolios.

5. Home office deductions

Self employed home buyers who use a portion of their home exclusively for business can take advantage of the home office deduction. You can use the “simplified method,” which allows a deduction of $5 per square foot (up to 300 square feet), or the “actual expense method.” Under the latter, you can finally say “yes” to the question: can you deduct homeowners insurance? You would deduct the percentage of the insurance that matches the square footage of your office.

6. Home improvement deductions

As discussed in previous guides, “capital improvements” aren’t deducted in the year they happen, but they are added to your home’s cost basis. This reduces your taxable gain when you eventually sell the home. Keeping track of these is a vital part of the homebuying process if you plan to flip the property or hold it for decades.

7. Energy-efficiency deductions

The 2026 tax year continues to reward “green” homeownership. Credits for solar panels, heat pumps, and high-efficiency windows can provide a direct dollar-for-dollar reduction in your tax bill, rather than just a deduction from your taxable income.

8. Deductions for accessibility improvements

For retirees or those with medical needs, installing ramps, widening doorways, or adding support bars can be considered a deductible medical expense. If these improvements are made for medical reasons and do not increase the home’s value, the entire cost may be deductible.

9. Capital gains tax exclusion

When you sell your primary residence, you can exclude up to $250,000 (single) or $500,000 (married) of the profit from your taxes, provided you lived there for two of the last five years. This is the ultimate “tax break” of homeownership.