The Tax Cuts and Jobs Act (P.L. 115-97) signed into law on Dec. 22, 2017, included two important changes to the U.S. tax code providing incentives for businesses to invest in new access control, surveillance security, fire and alarm systems. These incentives were part of the broader effort in the new law to produce long-term economic growth by encouraging business to make capital investments.
Generally, the costs of commercial-use security, fire protection and alarm systems are capitalized and depreciated over a recovery period of five, seven, 15 or 39 years, dependent on factors such as the type of system purchased, the integration within a building structure, whether the installation involves owned or leased property, and the relationship to business activity.
Beginning in 2018, the new tax law allows many businesses to write off the full cost of such systems as an expense for the tax year they were placed in service, eliminating the capitalization requirement. This Act is still in effect for 2021 and businesses are eligible to deduct the ENTIRE cost of the system purchase, labor and equipment included!!
SECTION 179 EXPENSING
Previously, small- and medium-sized businesses could deduct most business-related equipment placed in service during a year, up to $500,000 not exceeding taxable income (subject to carryover rules).
For the first time, and on a permanent basis, security systems and fire protection and alarm systems are now treated as qualifying Section 179 property under the law, despite being considered building improvements (real property). See 26 U.S. Code 179.
- Fire-protection and alarm systems, including sensing devices, computer controls, sprinkler heads, sprinkler mains, associated piping or plumbing, pumps, visual and audible alarms, alarm control panels, heat and smoke detection devices, fire escapes, fire doors, emergency exit lighting and signage, and fire-fighting equipment, such as extinguishers and hoses.
- Security systems for the protection of the building and its occupants, including window and door locks, security cameras, recorders, monitors, motion detectors, security lighting, alarm systems, entry and access systems, related junction boxes, associated wiring and conduit.
Certain security and life-safety products may qualify for bonus depreciation based on the length of the applicable recovery period, which tends to be less when use is related directly to the primary commercial activity of a business.
If you would like further clarification on this deduction, contact your accountant for the IRS.
Keystone Security Systems is locally owned and operated in Rochester, New York and can be reached at (585) 730-8324.