The income statement is one of citizens’ most important tax obligations each year.
During this process, all the income and expenses that have been had during the fiscal year must be reported to calculate the corresponding tax, and one of the most common is insurance premiums.
In this sense, many taxpayers wonder if home insurance is deducted from the income statement. In this article, we will analyse this issue and clarify its doubts.
Do you want to know more? We will explain it to you.
Table of Contents
What Is Home Insurance?
Home insurance is a type of policy that protects the home and its contents against different risks, such as fire, theft, water damage, etc.
This insurance is optional, although it is highly recommended in most cases since it covers possible damages that property and household goods may suffer.
There are different types of home insurance, depending on the needs and preferences of each owner.
Some policies offer comprehensive coverage, and others are more limited, depending on the degree of protection the homeowner seeks.
The most basic policies cover the content of the home, that is, all its structural elements, while other, more complete ones also insure the content, what is inside it, such as jewelry, computers, televisions, etc.
The greater the value of the insured and the greater the coverage, the greater the premium to be paid.
Does Home Insurance Deduct From The Income Statement?
The answer to this question is yes; Home insurance deducts taxes on the income statement as long as certain requirements are met.
Three possible scenarios give the right to deductibility: for investment in habitual residence, for rent, and in some cases if you are self-employed.
Home Insurance Deduction For Investment In Habitual Residence
The first assumption is that of investment in habitual residence.
Not all taxpayers can benefit from this deduction, but only those who acquired their home with a mortgage before January 1, 2019. The reason is that this deduction ceased to be applied to homes purchased from this moment due to changes in the regulations relating to housing taxation.
Other cases give the right to deduction:
- If you paid for the construction of your home before January 1, 2019.
- If you paid to rehabilitate your home or adapt it for dependent persons before January 1, 2019, provided the works are finished before January 1, 2023.
In addition, to deduct the amount of home insurance, it must be linked to a mortgage and cover minimal risks.
The maximum deduction corresponds to the deduction for habitual residence, including the home insurance premiums paid. That is, 15% of the total (7.5% the state part and 7.5% the regional part), with a maximum of €9,040 per year; a maximum of €1,356 per year.
Checkboxes to deduct home insurance for investment in habitual residence. The deductible amounts corresponding to this category are included in the section “Total amount of the deduction for investment in habitual residence,” reported in boxes 547 (state) and 548 (autonomous).
Rental Home Insurance Deduction
This is the most common case for home insurance deducting taxes on the income statement.
If you have a home that you own and that is rented, you can deduct the amount of home insurance from the returns on real estate capital.
In this case, you can deduct any insurance linked to the leased property, whether it only covers minimal damage or multi-risk insurance.
In this case, the home insurance can be fully deducted.
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Checkboxes To Deduct Home Rental Insurance
The home insurance deduction for lease can be found in the section “Relation of real estate and the income derived from real estate available to its owners, leased or transferred to third parties, or used for economic activities.”
Specifically, box 0114 must be filled in, corresponding to insurance contract Premiums, where the insurance amount will be indicated.
Home Insurance Deduction For Self-Employed Workers
Finally, self-employed workers can also deduct home insurance if they meet certain conditions:
- Home insurance must be associated with your economic activity.
- It must be registered in your accounting books.
- It must be adequately justified with the corresponding invoices.
- The expense must have occurred during the fiscal year to which the income statement corresponds.
In addition, it must be considered that the self-employed person does not deduct the entire insurance but only the percentage corresponding to the part of the home where he carries out his activity.
In other words, if, for example, you have home insurance for which you pay €100 a year and you only own 20% of the home associated with economic activity, you can deduct a total of €20.
Boxes to deduct home insurance for self-employed workers
The box to report the home insurance deduction for self-employed workers is number 200 (insurance premiums) within the section “Direct estimation of income from economic activities” in box 200 (insurance premiums).
Some Final Considerations
As you can see, home insurance can be considered a deductible expense in the income statement, although only in three different cases.
Each situation has its peculiarities, especially concerning its maximum limits and the total amount that can be deducted.
Of course, the amount to be deducted will also depend on the percentage allowed by the Autonomous Community in which you reside and each taxpayer’s personal and fiscal situation.
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