Fire Sprinkler Tax Incentives

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2018 Tax Incentives for Fire Sprinkler Installation

Now is the perfect time to invest in your fire sprinkler system or retrofit your building with this lifesaving, property-conserving protection. The tax cut legislation approved by Congress earlier this year provides significant tax incentives to install commercial fire sprinklers systems and to retrofit buildings. Specifically, the incentivizing of fire sprinkler installations is reflected in the following provisions of the tax code:

Cost Recover Section 13201 allows fire sprinklers to be fully expensed, meaning the property owner can immediately write off the full cost of the sprinkler system. This applies to both commercial and residential buildings. The benefits of this tax code change will be gradually phased out over time, eventually returning to the original expense limitation. 

Small Business Section 179 Expensing adds fire protection as an eligible expenditure to the tax code for qualified small businesses. 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 only. This is a permanent change to the law.

One of the problems with a new business trying to occupy an unsprinklered existing space, or property owners trying to update their facilities, is the cost of the sprinkler system, which can be a large expense for a small business. The changes in the tax law will provide a significant amount of relief for a small business owner.

Why Should You Install a Fire Sprinkler?

Research continually supports the necessity of fire sprinklers. The National Fire Protection Association (NFPA) data from as recent as 2017 indicates that:

  • the civilian fire death rate per 1,000 reported fires was 87 percent lower in properties with sprinklers than in properties with no automatic extinguishing systems
  • sprinklers were effective at controlling the fire in 96 percent of fires in which they operated

 Further, NFPA has no record of more than 2 deaths from a fire occurring in a building with a properly functioning fire sprinkler system installed. Buildings with working sprinkler systems have experienced significantly less property damage when a fire does occur, and business interruption is reduced considerably. 

Fire sprinklers save lives, property, water, money, the environment, and more. Most property owners can also expect reduced insurance premiums. Keep your patrons safe, keep your business running and limit your liability. The life and property you save may be your own!

If you have any questions regarding the sprinkler allowances in the 2018 Tax Cuts and Jobs Act, please contact your tax professional. More information about the incentives is available through the following organizations:

National Fire Protection Association

National Fire Sprinkler Association