Is insurance on a home office deductible?

What the publication says

Publication 587 lists insurance among the expenses that are deductible only if you use your home for business. The Insurance entry is short and has two sentences that matter. You can deduct the cost of insurance that covers the business part of your home. And if your insurance premium gives you coverage for a period that extends past the end of your tax year, you can deduct only the business percentage of the part of the premium that gives you coverage for your tax year; you can deduct the business percentage of the part that applies to the following year in that year.

This is a timing rule, not a new type of deduction. Insurance is an indirect expense under Table 1, because it covers the entire home, so it is deductible based on the percentage of the home used for business, and it is subject to the deduction limit.

How the split works

Take the premium, decide how many months of coverage it buys, and count how many of those months fall inside your tax year. The share of the premium for this year is premium times months in this year divided by total months of coverage. The business percentage then applies to that figure. The rest of the premium waits for the year it covers, and the same two steps happen again that year.

The publication does not say to count days or months, and it does not describe the method beyond the quoted wording. Months are the unit the calculator above uses because most homeowner policies run for whole months. If your policy has an unusual term, divide by days instead and keep your arithmetic.

A worked example

This example is not from the publication. A calendar-year taxpayer pays a $1,800 homeowners premium on October 1 for 12 months of coverage. Three of those months fall in the first tax year and nine fall in the next. The first-year part is $1,800 times 3/12, or $450. If 20% of the home is used for business, $90 is the business part for the first year. The remaining $1,350 applies to the next year, where the business part at 20% is $270, assuming the percentage and the qualification have not changed. The calculator reproduces this arithmetic.

If you renew every year on the same date, the effect settles into a steady pattern in which each tax year includes pieces of two premiums. The first year of business use can look light for that reason.

Which insurance counts

The publication speaks of insurance that covers the business part of your home. In practice that means the policy on the house itself, such as homeowners or renters coverage. Other insurance you carry for the business, such as liability or professional coverage, is not an expense of using the home and is deducted separately as an ordinary business expense. The publication draws this line in a different place: it says business expenses that relate to the business activity in the home but not to the use of the home itself, such as business phone, supplies and equipment depreciation, are handled outside the home allocation.

Keep the declarations page and the payment record. The recordkeeping section says your records must show the part of your home used for business and the expenses for the business part.

Insurance and the deduction limit

Insurance is one of the otherwise nondeductible expenses that the deduction limit caps. When gross income from the business use of your home is less than your total business expenses, the allocable insurance, utilities and depreciation are limited to the gross income minus the business part of mortgage interest, real estate taxes and qualifying casualty losses, and minus business expenses not related to the use of the home. Depreciation is taken last. In the publication’s 2025 example, maintenance, insurance and utilities of $800 fit under a $1,000 limit, so all of it was deductible and only depreciation was cut back.

If insurance is cut back, the excess carries over to the next year in which you use actual expenses.

If you use the simplified method

The simplified method replaces actual expenses with $5 per square foot of allowable area, up to 300 square feet. If you elect it for a year, you cannot deduct actual expenses for the business use of the home that year, which means no insurance deduction on top of the flat amount. Compare both ways in the simplified vs regular home office deduction calculator. To find the business percentage first, see how to figure the percentage of your home used for business.

Sources

• IRS Publication 587, Business Use of Your Home (2025): Actual Expenses: Insurance. Read November 2, 2026.

Edition read: Publication 587 (2025), for use in preparing 2025 returns. Dollar figures and rates in the publication are for 2025; check IRS.gov/Pub587 and the instructions for Schedule C and Form 8829 for your tax year. This page summarizes the publication and does not replace it. Marked for human review.