Tax Breaks for Business Security & Fire Alarm Systems Through 2022
July 11, 2022
ICYMI: The U.S. tax code section 179 was expanded by the Tax Cuts and Jobs Act (TCJA) to include property such as alarms, security systems, and fire protection (among other things) up to one million dollars. It went into effect in 2018 and 2022 is the last year to claim the 100% bonus depreciation!
U.S. Tax Code Section 179 & the Tax Cuts and Jobs Act
If you have qualifying new or used property (see list below) placed in service between 2018 and 2022, you can write off the cost of most section 179 depreciable assets using the 100% additional first-year depreciation deduction. This “bonus depreciation” must be taken the first year your equipment is placed into service but you can still choose to depreciate over time thereafter. After 2022, it will be reduced as follows:
Benefits to Your Business & the Economy
This voluntary tax incentive was designed to encourage businesses to invest in security systems, fire protection, and alarm systems (among other items such as HVAC and roofs) while remaining cash positive. It is believed that such capital investments would stimulate long-term economic growth. Writing off 100% of the cost of security and fire systems as an expense starting the year they were placed into service is a first… and a big win for business owners!
First, your upfront costs are lower thanks to the 100% year one deduction and resulting cash savings on your purchase (assuming a 35% tax bracket). Second, money is freed up for other important investments/purchases. The cash flow allows you to expand your capital assets and grow your business and the economy.
- Sensing devices
- Computer controls
- Sprinkler heads
- Sprinkler mains
- Associated piping or plumbing
- Visual & audible alarms
- Alarm control panels
- Heat & smoke detection devices
- Fire escapes
- Fire doors
- Emergency exit lighting & signage
- Fire-fighting equipment, such as extinguishers and hoses
When used for the protection of the building and its occupants, security systems include:
- Window & door locks
- Security cameras
- Motion detectors
- Security lighting
- Alarm systems
- Entry & access control systems
- Related junction boxes
- Associated wiring & conduit
The items on the above lists were not eligible prior to the new law. If you take advantage of the new law by the end of 2022, you won’t have to capitalize and depreciate these assets over a recovery period of five, seven, 15, or 39 years like you have in the past. For more information, please contact us!