Sprinklers Tax Incentive

In December, Congress passed the most sweeping tax reform legislation since 1986. Included in this legislation (P.L. 115-97) are two provisions that will greatly incentivize the installation of re sprinklers. Companies, especially small businesses, may now utilize changes made in the recently passed tax reform bill for accelerated cost recovery for the installation, upgrade, or retrofit of fire sprinkler systems in their properties.

Never before has this type of incentive for fire sprinkler systems been available. Previously, fire sprinkler systems were depreciated over 39 years in commercial buildings and 27.5 years in residential structures.

There is now significant incentive that potentially would allow for immediate cost recovery!

The Sprinkler incentives are:

• Small Business Section 179 Expensing – Previously qualified small businesses were allowed to fully expense purchases such as computers, equipment and light duty vehicles up to an annual cap of $500,000. Under the new law Congress has added fire protection as an eligible expenditure under section 179 of the tax code. Congress also increased the cap to $1 million as the amount that a small business can deduct in a single year. This provision applies only to commercial structures and cannot be used for retrofitting sprinklers into residential structures. However, critical occupancies such as entertainment venues could easily be done under this provision. This change is also a permanent law and is not gradually phased out over time.

What’s Included in Section 179:

• ✔︎ Roofs

• ✔︎ Heating, ventilation and air- conditioning property

• ✔︎ Fire protection and alarm systems

• ✔︎ Security Systems

Scorecard by Building Types Section 179 (P.L. 115-97):

✔︎ Nightclubs and other small businesses

✔︎ Restaurants/Diners (local owner)

✔︎ Bowling Alley

✔︎ Locally-Owned Movie Theatres

✔︎ Main Street America-type Shops

✔︎ High-Rise Commercial

𝙓 Residential Occupancies
𝙓 Condos