Insurance expense can only be claimed by the owner of the property. And only what they paid for that insurance for their rental property
- House insurance
- Business liability insurance if applicable.
- Mortgage insurance premiums (MIP)also known as points deducted ratably over the life of the loan with other points (also known as loan origination fees). They are not actually considered insurance in the normal sense of the word because it is used to pay off the mortgage in certain situations.
You cannot deduct insurance paid by the lender or money placed in escrow that has not yet been used to pay for any insurance.
Lender paid closing costs and those paid by the buyer/owner can be added to the purchase price of the home to create an adjusted basis for depreciation. This does not include points, MIP, property taxes or insurance are not part of the closing costs that are added to the purchase price.
Refer to Publication 527 for rental properties.
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