Owning a home is very rewarding – but it’s also very expensive. From the initial down payment to general upkeep, everything adds up. One of the biggest expenses for homeowners is home insurance. While not legally required if your house is fully paid for, home insurance is a must to qualify for a mortgage.
The good news is there are a couple of ways you can save money through certain tax credits. Be sure to double check up to date government information or ask a tax expert to find out what rebates you may qualify for.
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Is home insurance tax deductible?
No – home insurance isn’t tax deductible. However, if you have mortgage insurance you can deduct the premiums. And you can do it for both your home and rental properties. To avoid confusion, here’s an easy way to understand the difference between these similar definitions:
- Mortgage insurance protects you in case you can’t make your mortgage payments. (Tax deductible)
- Home insurance is a form of property insurance that provides compensation should a loss occur due to an insurable event. (Not tax deductible)
Can I claim tax deductions on a rental property?
Yes, landlords are allowed to claim home insurance for their rental property(ies). This means if you rent a separate property or the basement of your home, you can claim the full premium.
When doing your taxes make sure that you deduct only the premiums on your rental property for the current year.
Did you know? You can also claim rental income, heat, hydro, water and mortgage insurance.
Can I claim my homeowners insurance for a home office as an employee?
Yes–in certain situations home insurance is tax deductible if you’re an employee and you work from home. You must meet one of the following conditions to qualify:
- Your home office must be exclusively for working
- You must use that space to complete more than 50% of your work
Learn more about home office expenses employees can claim.
Can I claim my home office on my taxes if I’m self-employed?
You can deduct selected expenses from your tax return if you have a home business or are self-employed. Make sure that your home insurance policy provides coverage for running a business from home.
Keep in mind that your workspace must be your main place of business or used only for the purpose of making money. Secondly, the space must be used on a regular basis for meeting clients, customers or patients.
The Canadian Revenue Agency (CRA) also allows you to deduct things related to your home office like pens, pencils and stationery. Larger items such as chairs, desks and calculators are considered capital expenses and cannot be deducted.
Heads up! Sonnet’s home insurance policies don’t provide coverage for running a business at home. You’ll need to shop around for a provider that has this specific coverage.
Are home improvements tax deductible?
Yes, there are several federal and provincial tax deductions that homeowners can take advantage of. Check which tax rebate(s) you're eligible for.
- Energy-efficient rebate. If you’ve recently renovated your home to be more energy-efficient you might be able to apply for a Canada Greener Homes grant. It pays to green.
- Seniors’ home safety tax credit. If you’re a senior or have a senior living in your home, you might qualify for a tax credit that can help you make your home safer and more accessible (Ontario). Check to see which deductions are available in your province.
- Home accessibility expenses. If you or someone you live with has a disability, you can claim home accessibility expenses as a tax credit through the federal government.
- Home buyer’s tax credit (formally known as first-time homebuyer incentive). Congratulations! If you bought or built your first home, you can claim the $5,000 home buyers’ amount on your tax return.
Remember, it’s best to consult a tax expert before filing your taxes if you’re not sure what you can and can’t claim. They may even help you save more money on your tax return.