Is home insurance tax-deductible?

Owning a home comes with a long list of expenses, from mortgages to utilities, maintenance, repairs, and, of course, home insurance. Understandably, many Canadians want to know, "Is home insurance tax deductible?"

It's a fair question, especially with the rising cost of living and premiums across the country. In 2025, home insurance premiums climbed by 5.28% across Canada, with Alberta leading all provinces at 9.07%, followed by Manitoba at 6.67%, British Columbia at 5.89%, and Ontario at 5.45%.

With more Canadians working remotely or turning parts of their homes into rental units, knowing when and how insurance premiums can be used as a tax-deductible is more important than ever. While most homeowners won’t be able to claim insurance on their personal residence, there are important exceptions. And if you fall into one of those categories, you could save hundreds during tax season.

In this guide, we'll be going over everything you need to know about home insurance tax deductions, how to calculate your deductible percentages, documents you need to remain compliant with CRA regulations, and more.

Are homeowners' insurance premiums tax-deductible?

In most cases, your personal home insurance is not considered tax-deductible in Canada. For Canadian homeowners using their home solely as a private residence, the Canada Revenue Agency (CRA) views this as a personal expense. That means you can’t list it as a write-off on your personal tax return.

However, the tax implications change if you're using a portion of your home to earn an income, such as working remotely from a home office, renting out a basement suite, or running an Airbnb. Here's a closer look at when you may be eligible to deduct certain expenses related to your home from your tax return and when you can't:

The key factor here is whether you're using a portion of your property to generate an income. If you are, then the CRA may allow you to deduct related home expenses, including a share of your insurance premiums, based on how much of your home is used for business or rental purposes.

When is home insurance tax-deductible in Canada?

As we mentioned, the CRA allows deductions in a few specific scenarios where your home is being used to make an income. Let’s explore these scenarios in more detail below:

Home office expenses

If you’re self-employed or running a small business from your home, you may qualify to deduct part of your home insurance premium using the T2125 Statement of Business or Professional Activities form. Home-office expense claims increased by 41.4% in 2023, equalling over $2.08 billion, as remote work remains popular after COVID-19.

If you plan on using the T2125 form next tax season, you’ll need to calculate the percentage of your home used for work. Note that if you're a salaried employee working from home, you may still qualify for this tax deduction. But you'll need a signed T2200 from your employer.

Long-Term rental property expenses

If you rent out a portion of your home or an entire property to generate rental income, the CRA will allow you to deduct a portion of your rental expenses. To do so, you’ll report these rental expenses on a T776 Statement of Real Estate Rentals form. Note that this still applies if you're living in a single-family home and renting out your basement or a duplex where you live in one unit and rent out the other.

Short-Term rental expenses

If you use your property to host short-term guests through platforms like Airbnb or VRBO, you'll again report this rental income through the T776 form.

Other eligible expenses

Beyond claiming home office expenses and rental property income, the following are also considered eligible expenses in the eyes of the CRA:

• Expenses for new equipment like cell phones, laptops, fax machines, etc.

• Utilities like heat, electricity, water, and air conditioning expenses.

• Condo fees.

• Internet bills.

• Cell phone usage.

• General maintenance.

• Moving expenses.

• Rental payments.

• Administration fees.

• Any other reasonable expenses.

If you're unsure whether or not expenses related to your home business are considered a tax deduction, we recommend speaking with someone at the CRA directly or meeting with a tax professional for more information.

How to calculate the tax-deductible portion on your taxable income

Once you've confirmed that you're eligible to claim your home insurance premiums as a deduction, the next step is determining how much you can deduct from your taxable income:

Use the space or time method

There are two main methods of calculating the percentage of your home that is used to generate income: the space method and the time method. Here's what you need to know:

1. By square footage (Space method)

Let's say you have a dedicated office space that takes up 15% of your home's total square footage. You would then be able to deduct 15% of your property insurance from your income tax. For example:

Annual home insurance: $1,200

Office space: 15% of your home

Deductible portion: 15% × $1,200 = $180

2. By time used (If a shared space)

Now, let's say you don't have a dedicated office space in your home. Instead, you work at your kitchen table 8 hours a day, which is considered a shared space you use when you're not working as well. You would then have to calculate how much of the total time and space is used to earn employment income. Note that the CRA may ask you to provide financial statements, home layouts, and other documents. So, ensure you're keeping measurements, receipts, and a journal of your hours handy, just in case.

Additionally, you can use the same method for your residential rental property or Airbnb setups. Just make sure that you're only claiming the portion of your property insurance premium that's directly related to your rental or business income.

Documentation you need to claim a deduction

Depending on your income levels and deductibles, your taxes may be flagged for an audit by the CRA. If this happens, you'll need to make sure that you have the right documentation to support your tax deductions in Canada, including:

• T2125 (Self-Employed Business Use of Home).

• T776 (Rental Property Income & Expenses).

• T2200 (If You’re an Employee Working From Home).

• Receipts or invoices for your insurance premiums.

• A breakdown of the space or time used for income-earning purposes.

• A home layout sketch or floor plan (may or may not be requested).

To ensure you're organized, we recommend keeping a hard and digital copy of all your receipts. The CRA often requires up to six years' worth of financials during your review.

According to the Financial Post, if you're unable to provide proper documentation of your expenses related to your home insurance and other costs when you generate income, your tax deductions will likely be denied.

Claiming property insurance as a tax deduction: Common mistakes to avoid

Whether it's your first time doing your own taxes or you've recently switched to a remote position, there are some common mistakes that many Canadian homeowners make that could cost them their refund:

Mistake 1: Deducting 100% of personal homensurance

Unless your entire home is dedicated to business or rental use, you can't deduct the entire portion of your home insurance from your taxable income for the year. You'll need to provide a percentage based on the space you use, not your entire home.

Mistake 2: No separation of business and personal use

If you work from your kitchen or a shared family room, you'll need to calculate the time you spend generating an income and clearly document your hours to be able to deduct a portion from your taxable income. Vague details and missing documents could raise a red flag at the CRA, leading to an audit.

Mistake 3: Forgetting to update your policy

Do you use a portion of your home as a rental property or operate an Airbnb? Make sure you tell your insurance company so you have the right home insurance coverage in place. Failing to do so can void your coverage and get you in trouble with the CRA.

Mistake 4: Missing or vague records

Make sure your documents are thorough and up-to-date. Being unable to provide evidence for your tax deductibles in Canada will lead to a CRA audit that could translate into serious consequences.

Can I deduct mortgage insurance premiums?

If you have mortgage insurance on your mortgage, you can likely deduct your premiums from your taxable income.

Can I deduct property taxes from my taxable income in Canada?

Yes, you can deduct your property taxes from your taxable income if you own and operate a rental property on Line 9180 on your taxes.

What if I work from home but receive a T4, can I still deduct from my taxes?

You’ll need a signed Tax Form T2200 from your employer confirming that you are required to work from home. Once this form is submitted to the CRA, you'll be able to deduct a portion of your home insurance and other home-office-related expenses.

What if I co-own a rental property with someone else?

If you co-own a rental property with another person(s), you'll each claim your share of expenses and income according to your ownership percentage.

Is condo insurance deductible for landlords?

Yes. If you own a condo rental property, the insurance you pay on that condo unit is considered tax-deductible under Form T776.

The bottom line

Understanding when home insurance is tax-deductible in Canada can help you make smarter financial decisions come next tax season. Remember, home insurance isn’t tax-deductible for private residences, but you can deduct a portion of your insurance if you use your home for business, as a rental property, or both. If you're still unsure, speak with a tax professional for more information.

And, if you're looking for customized coverage for your home, the experienced brokers at BrokerLink can help you acquire the following and qualify you for discounts, so you can save on your coverage:

• Tenant and renters insurance

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FAQs on home insurance tax deductibles

Can I claim home insurance tax deductions on a rental property?

Yes, if you own a rental property, you can deduct several expenses from your taxable income come tax time, and that includes property insurance. For instance, if you rent out a property or even a portion of your primary residence, you can claim your entire home insurance premium. You may also be able to claim other expenses, like mortgage insurance, utilities, and rental income.

Can I claim my homeowners insurance premium for a home office if I am an employee?

In certain circumstances, you might be able to claim your home insurance premium when you are an employee who works from home. It’s not just owners of home businesses that are eligible for home insurance tax deductions. To qualify for a home insurance tax deduction if you are an employee who works from home, your home office must be exclusively used for business purposes and the space must be used to complete over 50% of your work.

How can I save money on home insurance?

There are many ways you can save money on home insurance, whether you qualify for a home insurance tax deduction or not. For example, you can bundle insurance policies, install a sewer backup detection device or monitored alarm system in your home, purchase a home located near a fire hydrant or fire station, pay for your home insurance policy annually instead of yearly, or work with a broker to compare policies and get a competitive rate. Another way to save money on home insurance is to reduce home insurance claims. The more insurance claims you file, the higher your insurance rates are likely to be. To learn more about why insurance premiums increase, contact an insurance broker.

If you have any questions, contact one of our local branches.