Because of recent tax law updates – you may qualify for tax incentives related to fire sprinklers in commercial buildings. The drive behind these changes is to protect life & property as well as stimulate the economy – but what it means for you is that you may be able to write-off the entire cost of installing, improving, or expanding a fire sprinkler system in your commercial building.
Request a fire sprinkler quote from RCI Fire of Phoenix, AZ – then talk with a tax professional who can look at the quote price, new incentives, and your finances.
Do Tax Incentives Apply to Your Business?
The new tax incentives involve two recent changes – or more technically, a law change, and a more recent correction to that change.
2017 Tax Reform for Small Business Fire Sprinkler Tax Breaks
There was landmark tax reform legislation in 2017. Among many changes was Section 179, which permitted small businesses to write-off up to $1.04 million for retrofitting a commercial building with a fire sprinkler system. It even allowed businesses who used bank loans to finance installation to expense the interest on that loan and included fire sprinkler system updates/upgrades as well as new systems.
Even with the limitation to small business and a maximum expense limit – this tax incentive represented a huge opportunity for commercial buildings to increase safety & security from fire damage and all of its after-effects.
Coronavirus Changes – Expanding Tax Incentivizes from 2017
A correction to Section 179 was made in 2020 as part of the Coronavirus Economic Stabilization Act (CESA) that expanded the fire sprinkler tax incentives to businesses of any size. It is still limited to commercial property, but means that many more businesses are incentivized to explore fire sprinkler system improvements.
However – this tax law update covered in Cost Recovery Section 13201 does have a limited time window, only applying to fire sprinkler systems installation/upgrades from September 27, 2017 to December 31, 2022. Post-2022, the deduction allowed starts to decrease from 100% to a set schedule in 2027.
As long as they act quickly, larger commercial buildings that were not adequately covered with the $1.04 million limit from 2017 can fully expense much larger projects with this correction/update.
(NFSA has created a Fact Sheet you can reference for more info)
Why Encourage Commercial Fire Sprinkler Systems?
Obviously, preventing or lessening the severity of a commercial structure is a good thing – but one thing many people forget is how much can be impacted by a fire in a commercial building, even after the fire is out.
There is of course the damage to the building, even if all people inside the people (and emergency responders) are completely unharmed. There are repair & remodeling costs to the building owners, but businesses that rent the space are also without their place of business while those repairs take place. Neighboring businesses can also be impacted by the fire, if not by the flames, then by the absence of businesses specifically affected by the fire.
Fire sprinkler systems are extremely effective (96%) at controlling building fires if correctly designed, installed, and maintained.Despite this, in 2010-2014, there were still many many stores, offices and warehouses without any kind of fire sprinkler system (up to 75%!).
Don’t delay – now is the perfect time to look into installing or upgrading your commercial building’s fire sprinkler system. You may be able to write-off the entire expense – and make your building more protected & safe for everyone who uses it.
Retrofitting Fire Sprinklers in Phoenix, AZ
RCI has been involved with hundreds of fire protection projects in Phoenix & across Arizona – including design & install fire sprinkler projects for any size building. If you want to talk to the experts about what it might take to retrofit your commercial building with a fire sprinkler system – contact RCI Fire today! We can’t help with your taxes, but you can take our quote to your trusted tax person to see how these new tax incentives might affect you.
RCI Fire doesn’t just do fire sprinklers, our team of 75 experts also works with fire alarms and backflow prevention devices in fire protection systems – whether you need an inspection, repair, or completely new system. We also provide 24/7 emergency fire protection service for clients in our local community.