Few issues have consumed the news and media in recent months as much as the recent tax law. For many average small-to-medium-sized business owners, the tax reform is both obviously important to know yet dauntingly complex to understand with regards to practical impact.
But one clear thing small and medium sized businesses should be excited about is the revision to Section 179. Previously, Section 179 permitted businesses to deduct up to $500,000 in qualified property expenses for a given year. Before now, though, fire protection systems, including fire alarms, and security systems were not considered as a qualifying expense.
The new reform to Section 179 changes that.
How is Section 179 Changed
Basically, the IRS tax code Section 179 permits businesses to expense, or deduct, the full purchase price of any qualifying property or equipment that they financed or fully purchased in a given tax year. This acts as an incentive encouraging businesses to invest in themselves, which simultaneously increases revenue for other businesses as well and keeps money flowing.
With the new reform, it has changed in two key ways that are exciting for small to medium-sized businesses.
In previous years, the maximum deduction was capped at $500,000. In the new bill, the deduction was raised to $1,000,000. However, this is only for businesses who spend no more than $2,500,000 on qualifying purchases. As soon as a business spends more than the $2.5 million cap, the deduction decreases dollar for dollar. Businesses that spend $3.5 million or more on qualifying equipment will not qualify for the deduction at all.
Thus, the Section 179 revision truly is aimed at small to medium-sized businesses and enables them to make significant purchases to improve their business in a single year and get a tax break for it.
The second important change that makes the revisions to Section 179 a huge benefit is that they now include fire alarms, fire protection systems, and security systems as a qualifying purchase. This provides a much-needed incentive for small to medium-sized businesses to go ahead and front the cost to make necessary safety and security upgrades that before would have been an enormous burden.
As things were before, small business owners were practically de-incentivized to make these improvements that are vital to the health and safety of their employees and customers. A business would have to pay for them and only be able to write off a little bit at a time each year as they depreciated.
Now, these vital safety systems can be purchased and immediately deducted in full. In some ways, the reform to Section 179 is about to make businesses much safer.
So What Does It Mean?
So, if your business is in need of a new or upgraded fire alarm, fire suppression, and/or security system, you can:
- Purchase or finance a new or upgraded fire alarm or security system and deduct the entire purchase price from your 2018 gross income as long as you…
- Fully finance/purchase the system and put into operation during the 2018 tax year (Jan 1 – Dec 31, 2018)
- Which means you can take advantage of the new technologies and advancements in fire protection and security systems without being punished for it
With the tax reform solidly in place for now, there really is no time like the present to take advantage of it.
If you have been waiting for the “right time” to finally make an upgrade or to purchase a new fire suppression or security system, 2018 is that right time. Since you must make the purchase and have your new system fully implemented and operating during the same tax year, sooner is definitely better than later.
If you are ready to take advantage of this opportunity, give the experts at Koorsen Fire & Security a call. They can talk you through the best options for upgrades to or replacements of your fire suppression, fire alarm, or security system and ensure that your business, employees, and customers have the best protection possible.