Home hazard insurance is required whenever you buy a house and need a mortgage loan. The mortgage company needs to be reasonably assured that it will be reimbursed in case of a casualty loss or other costly problem with the house. While you currently cannot deduct your home hazard insurance premiums on your taxes as an itemized deduction, you can deduct a portion of your home hazard insurance payments if you are a business owner who files a Schedule C (Profit or Loss From Business) and Schedule 8829 (home office deductions). The only insurance premiums that you can deduct on Schedule A are prepaid or private mortgage insurance (PMI) that is required to obtain and maintain the loan.
Gather all of the paperwork related to the amounts you paid for home hazard insurance. Add up the payments to get the total amount you paid for the year.
Pull out Form 8829 known as Expenses for the Business Use of Your Home. Figure out the percentage of your home that is used for business use only to enter in Part I of the form ("Part of Your Home Used for Business").
Enter the total amount of home hazard insurance premium you paid in the previous year on line 17 of Form 8829. Generally, you can deduct only your home hazard insurance as an "indirect expense" on Form 8829 since it does not directly relate to your business operations. In order to deduct an insurance payment under home business expenses as a direct expense it would have to be directly associated with your business activities at home in some clear way.
Add up the total indirect expenses on line 22(b), and then multiply it by the percentage of your home that you use for business purposes (from Part I). Add that amount to line 22(a) and any carryover deduction from the previous year. Place the resulting amount on line 25.
Determine your allowable operating expenses on line 26 (the smaller of line 15 and line 25). Complete the remainder of the form per your specific business needs. Your total deductible home hazard insurance premium will be included in the amount on line 35. This amount will be transferred to your Schedule C form and eventually be accounted for on your IRS Form 1040 line 12 (Business Income or Loss).