diff --git a/src/modules/directory.rs b/src/modules/directory.rs
index 01cd6c011..4bab47c71 100644
--- a/src/modules/directory.rs
+++ b/src/modules/directory.rs
@@ -8,7 +8,8 @@ use super::{Context, Module};
 ///
 /// Will perform path contraction and truncation.
 /// **Contraction**
-///     - Paths beginning with the home directory will be contracted to `~`
+///     - Paths beginning with the home directory or with a git repo right
+/// inside the home directory will be contracted to `~`
 ///     - Paths containing a git repo will contract to begin at the repo root
 ///
 /// **Truncation**
@@ -57,7 +58,7 @@ pub fn module<'a>(context: &'a Context) -> Option<Module<'a>> {
     let repo = &context.get_repo().ok()?;
 
     let dir_string = match &repo.root {
-        Some(repo_root) if truncate_to_repo => {
+        Some(repo_root) if truncate_to_repo && (repo_root != &home_dir) => {
             let repo_folder_name = repo_root.file_name().unwrap().to_str().unwrap();
 
             // Contract the path to the git repo root
diff --git a/tests/testsuite/directory.rs b/tests/testsuite/directory.rs
index 25926a240..86f2aefd9 100644
--- a/tests/testsuite/directory.rs
+++ b/tests/testsuite/directory.rs
@@ -419,6 +419,37 @@ fn directory_in_git_repo_truncate_to_repo_true() -> io::Result<()> {
     Ok(())
 }
 
+#[test]
+#[ignore]
+#[cfg(not(target_os = "windows"))]
+fn git_repo_in_home_directory_truncate_to_repo_true() -> io::Result<()> {
+    let tmp_dir = TempDir::new_in(dirs::home_dir().unwrap())?;
+    let dir = tmp_dir.path().join("src/meters/fuel-gauge");
+    fs::create_dir_all(&dir)?;
+    Repository::init(&tmp_dir).unwrap();
+
+    let output = common::render_module("directory")
+        .use_config(toml::toml! {
+            [directory]
+            // `truncate_to_repo = true` should attmpt to display the truncated path
+            truncate_to_repo = true
+            truncation_length = 5
+        })
+        // Set home directory to the temp repository
+        .env("HOME", tmp_dir.path())
+        .arg("--path")
+        .arg(dir)
+        .output()?;
+    let actual = String::from_utf8(output.stdout).unwrap();
+
+    let expected = format!(
+        "in {} ",
+        Color::Cyan.bold().paint("~/src/meters/fuel-gauge")
+    );
+    assert_eq!(expected, actual);
+    Ok(())
+}
+
 #[test]
 #[ignore]
 fn use_logical_and_physical_paths() -> io::Result<()> {