If you are renting your home, whether it is a house or an apartment, it is often recommended that you get renters insurance. This is a good thing to have to protect your possessions. If there is flooding or a fire or some other disaster in your apartment or home, you will not be protected for the damage. The landlord may have insurance on the building, but that is the common areas or if the whole building falls down. They are not going to have any protection for you so you could lose out without the right insurance.
Many customers wonder if they are able to claim some of their renters insurance on their tax return. They know that this is an important aspect to have on the area, but there are so many other deductions that are available, that many ask if they can deduct the insurance or not. In most cases, you are not going to be able to deduct your renters insurance premiums. But, if you work out of your home or if you are the owner of the rental property and insure the whole building, it is possible to deduct some of the expenses of your insurance.
If you are considering whether or not you qualify for this deduction, you should talk with your tax professional. They will be able to discuss some of the different deductions that you could get for this insurance and help you get set up for your tax return in no time.
What is Renters Insurance?
Since you are not an owner of the property you live in when you are in a rental property, you are only going to be responsible for your personal possessions inside the building in cause of a disaster. Most of the time it is up to you whether to have the insurance, although some landlords are going to require the residents to purchase the insurance to keep liability down. You can go through your insurance company to get this insurance to keep your possessions safe in case of a disaster.
Personal Dwelling
You are not going to be able to deduct the insurance premiums for renting if you just live in the property that you are renting. However, if you live in the home and run a home office out of the apartment, you could deduct some of the premium that is going to apply to the office space. You will need to delegate a certain area of your home that is just for the business and nothing else, and then figure out how much of a percentage of your home that area is taking up. Then you can figure out how much of the premium you can deduct on your tax return.
These numbers are sometimes hard to figure out. Talk to your tax professional to figure out how to come up with the number that you need to deduct any renters’ insurance premiums if you have a home office in your home.
Rental Property
Owning a rental property is a great way to make some money on the side. You can keep the building nice and it is a steady income that you are going to be able to enjoy. But as the landlord, you will need to keep some good rental insurance in place to protect the buildings. While you are not responsible for the items that are inside the building, you are going to be responsible for the building and the common areas of the building. If something does go wrong, you will need to take the time to call the insurance and get it all fixed or you are the one who has to pay for it. If you get this insurance to protect the buildings that you rent out, your premiums can be deducted against the amount of rental income that you make for the year.
Make sure to keep track of all the paperwork, but for the amount of rental income you are bringing in as well as for the amount that you pay in renters’ insurance premiums and more. This is going to make it easier for your tax professional to be on your side and they will be more likely to help you along the way.
Reporting the Expenses
If you are getting the deduction because of your home office, make sure to include the amount in your home office expenses when you itemize. Your tax professional will be able to help you get this done. If you are claiming it as the landlord, you will be able to do it on the Schedule E which is the form for “Supplemental Income and Loss.” Both of these are easy to fill out and use as long as you keep the right paperwork in order to prove the costs that you incurred.
There are only a few times when you are going to be able to deduct your renter’s insurance. Most individuals have to choose whether or not to get this and they don’t have the option of getting any deductions. But if you are the landlord who is protecting their investment or someone who works out of a home office and rents, it is possible to deduct these charges. Contact our offices today to learn how you can deduct these and other costs from your tax return today.
