Paying Home Insurance
We got our 3 year insurance bill. It costs about $500 more to finance the full premium into 3 annual payments- or we can pay in full and save those financing costs. We can manage the full payment, but is there any possible down side to paying in full? Does that mean I could only…
We got our 3 year insurance bill. It costs about $500 more to finance the full premium into 3 annual payments- or we can pay in full and save those financing costs. We can manage the full payment, but is there any possible down side to paying in full? Does that mean I could only deduct insurance costs (for the rental portion) this year and not spread out over the 3 years? Any advice appreciated!
I did this one year, interest was like 16%. No thanks, I will just pay it up front. smeyer is right, as a cash basis tax payer you have to deduct it all in the same year it was paid. As accrual, you could definately spread it out.
the technical rule is a three year policy should be proportioned over three years BUT as a cash basis tax payer you probably can also deduct it in the year that it is paid. Also even though its financed you probably can deduct it in your first year completely any way and then deduct the interest paid as a business expenses.
and remember its only deductible as a business expense.
What interest rate are they charging you? you should talk with a bank and see if they charge a lower interest rate.
Finally there is little problem/risk in paying for three years. Any NY state admitted carrier is not going anywhere….at least not now.