Tax Reform Offers Incentives for commercial fire sprinklers

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New law incentivizes business owners to retrofit their properties with fire sprinkler systems

The International Association of Fire Chiefs and the Cape Coral Fire Department want to make businesses in Southwest Florida aware of a provision in the recently passed tax reform legislation (P.L. 115-97) that incentivizes the installation of fire sprinklers. The new law allows business owners to deduct the cost of retrofitting their properties with fire sprinkler systems as a Section 179 expense.

Previously, qualified small businesses could deduct up to $500,000 for computers, equipment, and light-duty vehicle expenses. Under the new law, Congress has added fire protection as an eligible expenditure under Section 179 of the tax code. Congress also increased the cap to $1 million as the amount that a small business can deduct in a single year. This tax policy increases the economic feasibility for businesses, restaurants, bars, and other establishments to protect employees, customers, property, and firefighters. In addition to the incentives provided by the new tax code, some insurance agencies take fire sprinkler systems into consideration when setting rates.

The NFPA (National Fire Protection Association) released a report in July 2017 on the performance and effectiveness of fire sprinklers. The full report can be found at http://bit.ly/2DSx85m. Below is a summary of the findings:

Sprinklers are a highly effective and reliable part of a building’s fire protection system. In 2010-2014 sprinklers were present in 10% of reported U.S. fires. The death rate per 1,000 reported fires was 87% lower in properties with sprinklers than in properties without them.  The civilian injury rate was 27% lower, and the firefighter injury rate was 67% lower. In fires considered large enough to activate the sprinkler, sprinklers operated 92% of the time. Sprinklers were effective in controlling the fire in 96% of the fires in which they operated. Taken together, sprinklers both operated and were effective in 88% of the fires large enough to operate them. In three-fifths of the fires in which the sprinkler failed to operate, the system had been shut off.

Ryan Lamb, Interim Fire Chief for the Cape Coral Fire Department, emphasizes the importance of these findings, “many different studies have been completed throughout the years and they all conclude that fire sprinkler systems save lives. Period.”

The Cape Coral Fire Department encourages commercial property owners and business leaders to take advantage of this important life- and property-saving tax break incentive that is available to them and to speak with their tax professional for details.