Yes, homeowner insurance on a rental property can be deducted, but it depends on certain conditions. Homeowner insurance premiums for a rental property are generally considered a deductible expense. However, the deductibility of these premiums varies depending on whether you are actively involved in managing the rental property or if you hire a property management company.
If you are actively involved in managing the rental property, you can deduct the full amount of the homeowner insurance premiums as an ordinary and necessary business expense on Schedule E of your tax return. This is because the homeowner insurance is directly related to the rental activity and is considered a cost of doing business.
On the other hand, if you hire a property management company to handle the day-to-day operations of the rental property, the homeowner insurance premiums may be treated as a rental expense rather than a business expense. In this case, you can still deduct the premiums, but they would be reported on Schedule E as a rental expense rather than as an ordinary and necessary business expense.
It's important to note that personal use of the rental property may affect the deductibility of homeowner insurance premiums. If you use the property for personal purposes for more than the greater of 14 days or 10% of the total days it is rented to others at a fair rental price, the homeowner insurance premiums may be limited. In this case, you would need to allocate the premiums between personal and rental use based on the number of days the property is used for each purpose.
As always, it's recommended to consult with a tax professional or accountant for specific advice regarding your situation, as tax laws can be complex and subject to change. They can provide guidance on how to properly deduct homeowner insurance premiums on a rental property and ensure compliance with tax regulations.