In December 2017, the United States Congress passed new tax reform legislation containing two new provisions that may be of interest to you, in the event you are considering making improvements to your Fire Protection & Life Safety Systems (Fire Sprinklers, Fire Alarm, Security Systems, etc.). Both involve new accounting choices for writing off the cost of your Safety investments, and are described below:
Cost Recovery Section 13201: In commercial structures, the cost of Fire Protection Systems has historically been depreciated over a 39-year time horizon. Under this new law, any Fire Protection System installed after 9/17/17 can be fully ‘expensed’. That gives the property owner the option to immediately write off the cost of the system in the same year it was paid for. This law allows the 100% expensing method until 2022, after which, business owners will be able to write off an increasingly reduced percentage of the expense until 2027 when the 39-year depreciation method returns.
Small Business Section 179 Expensing: For qualified small businesses, under this new law, fire protection has been added to the list of purchases that can be fully expensed (joining computers, light duty vehicles, and equipment). The annual cap for expensing these items was also increased from $500,000 to $1,000,000. This provision is permanent, per the language in the Act, and does not have a phase out clause like the above Section 13201 provision. The new Section 179 language allows for the immediate write-off of Fire Sprinkler Systems, Fire Alarm Systems, & Security Systems in commercial buildings.
The above information was gathered from several industry trade association releases we have reviewed. If you are considering making fire protection improvements, it may be in your best interest to have your Accounting team research this new Congressional Act for the specific criteria in these new laws. We hope you find this information helpful as you continue to be mindful of the safety of your team members and patrons. Please do not hesitate to call State Systems for assistance with any of your Fire Protection & Life Safety needs.
