Are Property Taxes and Home Insurance Tax Deductible in Canada?

Even though the holidays are right around the corner, many Canadians are getting ready to submit their taxes. While preparing for the upcoming tax season, many Canadians look for expenses that they can deduct from their taxable income. Deducting certain expenses can help you save a significant amount of money during tax season.

If you’re a homeowner, you’re likely asking yourself a number of questions, like “is property tax deductible in Canada?” and “can you deduct your home insurance premium from your taxable income?”.

We answer these questions, and many more, in the following paragraphs.

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Continue reading to learn more about deducting your property taxes and home insurance premium in Canada.

Is property tax deductible in Canada? — An in-depth guide for homeowners

Paying taxes is a necessary part of life; thankfully, you can deduct several expenses from your taxable income in order to reduce your costs.

This leads to the question, “are there property tax deductions for homeowners in Canada?”.

Yes, but you can only take advantage of these deductions under certain circumstances.

When is property tax deductible in Canada?

Generally, you can only deduct your property tax from your taxable income if you use all or a portion of your property to generate rental income or if you use your home for business-related purposes (self-employed small business owners and employees who work from home on commission). 

Canadians who meet said requirements can deduct all or a portion of their property tax from their taxable income. This is something that you should keep in mind if you work from home on commission or use your home for a small business.

Speak with your tax preparer or accountant to learn if you qualify for a property tax deduction in Canada.

When isn’t property tax deductible in Canada?

If you don’t use your property to generate rental income or use your home for business-related purposes, you cannot deduct your property tax from your taxable income.

However, there are a number of things that you can deduct from your income (we’ll touch on those later on).

Is home insurance tax deductible in Canada? — An in-depth guide

Knowing what you can and can’t deduct from your taxable income is an essential skill that can help you save a significant amount of your annual earnings.

If you’ve recently purchased your first home, you’re probably wondering, “is home insurance tax deductible for homeowners?”.

In most cases, no, home insurance is not tax deductible for homeowners in Canada, but there are a few exceptions.

Like property tax, you can deduct your home insurance premiums from your taxable income if you rent (all or a portion) of your property or you use the property for the business-related purposes mentioned above.

Aside from home insurance, eligible homeowners can deduct a portion of the following expenses from their taxable income including:

• Lease expenses for cell phones, laptops, fax machines, etc., related to commission earnings 
• Heat, electricity, and water
• Condominium fees related to utilities
• Internet access-related expenses
• General maintenance
• Rental payments (for your personal living space)

Remember that you can only deduct the portion of the expenses relative to their business-related usage. 

For example, if 50% of your cell phone usage is business-related, you can only deduct 50% of the annual bill from your taxable income. It would be best if you kept this in mind while filing your taxes this year.

Speak with your tax preparer or accountant to learn more about the eligibility criteria for homeowners in Canada.

*Most home insurance companies will not cover home-run businesses unless you invest in coverage for running a business from home. Speak with your Surex insurance advisor to learn more.*

Is mortgage insurance tax deductible in Canada?

Yes, Canadian homeowners can deduct their mortgage insurance premiums from their taxable income.

For those who are unaware, mortgage insurance is a niche type of coverage that financially protects you if you accidentally miss a mortgage payment. 

The loan-to-value ratio of the property directly influences your mortgage insurance premium. If you make a high down payment (over 20% or more), you will pay less for mortgage insurance. But, if you made a modest down payment (less than 20%), you will need to pay more for financial protection.

Additionally, even though mortgage insurance isn’t legally required in Canada, your mortgage lender can ask you to obtain a mortgage insurance policy if you made a down payment of less than 20%.

This is something that you should keep in mind if you are thinking about buying a home in the near future.

Are home improvements and renovations tax deductible in Canada?

Although most Canadian homeowners cannot deduct their property taxes or home insurance premiums from their taxable income, they can deduct a variety of home improvement-related expenses.

Various provinces and territories have their own sets of renovation-related tax deductions (also known as tax rebates), so you should speak with your tax preparer or accountant to get the in-depth details. 

But, we can provide you with some general examples of the renovation tax deductions that are available in Canada:

• Canada Greener Homes Grant
• Seniors’ Home Safety Tax Credit (Ontario only)
• Disability Tax Credit (DTC)
• Home Buyer Tax Credit (previously referred to as the First-Time Homebuyer Incentive)

Taking advantage of one or more tax rebates can help you save a significant amount when it comes time to file your taxes.

Save up to 25% on insurance when you bundle your policies with our team at Surex

Although we can’t help you file your taxes (sorry!), we can help you find and save on the best home insurance in Canada.

As one of Canada’s top online insurance brokerages, we work with a long list of reputable home insurance companies, like Economical. Working with the best home insurance companies in Canada allows our team to provide hardworking homeowners (like you) with some of the most competitive insurance quotes in the industry.

Call or click to contact your personal advisor and experience the Surex difference.

While you’re comparing quotes with your advisor, be sure to ask about your bundling options. Bundling your insurance policies with the same provider is a great way to reduce your annual expenses (sometimes by as much as 25%).