Amanda Beck

Small Business Deduction for Fire Sprinklers

Amanda Beck, AICP, Planner II, 509.625.6500

Monday, March 4, 2024 at 10:55 a.m.

Small Business Deduction for Fire Sprinklers

Reported by the U.S. Fire Administration, over the period of 2012-2021, saw that there were 116,500 fires, resulting in 115 deaths and 1,025 injuries. Those fires caused $3,697,200,000 in property and economic activity losses.

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 starting in 2024. 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 may need to make some updates to basements, including retroactively for older and historic buildings. A basement can come in into compliance with fire code through installation of sprinklers, adding a basement exit that leads directly to the exterior of the building, or by reducing the size of the basement.

Annual commercial and multifamily building fire inspections start with a mailing sent to the property owner asking them to call the Fire Department to schedule their inspection. Property owners receive a list so they know the things the fire inspector will be looking at during the inspection, so they can be aware of any changes that might be needed ahead of the scheduled inspection. You can review this sample inspection letter to see the checklist.

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’s 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:

Year Depreciation
2017-2022 100%
2023 80%
2024 60%
2025 40%
2026 20%
2027 The depreciation schedule is permanently set at 15 years.

Contact the Fire Department with questions on annual fire inspections by calling 509.635.7000. Questions on next steps for your building? Contact the Developer Services Center at 509.625.6300, or visit DSC staff on the 3rd floor of City Hall.

The Developer Services Center is open Monday, Tuesday, Thursday, and Friday 8 a.m. – 5 p.m., and Wednesday 11 a.m. – 5 p.m.

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