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The Spokane Fire Department is committed to reducing fire risk and human and building vulnerability, which is why commercial building owners may be seeing our fire inspectors more frequently beginning this year. As our fire inspectors get out to more buildings, some building owners may need to make updates to their buildings that include installation or upgrades for fire sprinklers. Commercial buildings with basements that are 1,500 square feet or larger will need to sprinkler those areas, including retroactively for older and historic buildings.
The 2017 Tax Cuts and Jobs Act allows business owners to write off the full cost of commercial fire sprinkler systems as an expense up to $1.04 million. This benefit enables many small businesses to immediately recover the costs of the upfront investment. Those who borrow money to pay for a project can fully deduct the interest expense of the loan, as well. Section 179 of the U.S. Internal Revenue Code has long allowed small businesses to deduct the cost of certain property like machinery as an expense at the moment it’s placed in service—instead of writing it off over its useful life. The new Section 179 deduction applies to upgrading existing systems or retrofitting systems in existing structures. It is part of the TCJA’s broader effort to stimulate long-term economic growth by encouraging businesses to make capital investments.
Under Cost Recovery Section 13201, there is an allowance for bonus depreciation for upgrades made between 2017-2027. Previously, the costs for sprinkler system installations in commercial structures were depreciated over a 39-year time horizon. Under the new law any sprinkler system in an existing commercial structure has the ability to deduct costs as follows:
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