There’s no denying that, when it is tax season, you’re going to want to look at every possible way to get some savings.
And one type of potential tax savings is a capital improvement.
You might be wondering if you can write off your new home security system as a capital improvement.
I was wondering the same thing when I decided to invest in my home security system.
I live in a small town, and even though there is little in the way of violent crime, we have lately been plagued by things like catalytic converter theft.
So, I wanted to make sure that I beefed up my home security.
As I was starting to prepare for tax season, I wondered if this would be considered a capital improvement.
I decided to comb through some IRS documents and dig around on the Internet to learn what I could about home security systems being considered a capital improvement.
Are Security Cameras Considered a Capital Improvement?
A home security system is not normally considered to be a capital investment. The only homeowners this applies to are those whose homes are also their primary business locations. The cameras must cover all windows and doors, and only the part that covers your business can be considered tax deductible.
One of the most important things I discovered is that, while most of us cannot deduct our home security systems from our taxes, we can get discounts on our homeowners insurance policies.
There are, of course, a few loopholes, and the one I benefitted from was using my home as my business.
You cannot simply be an employee working from home though.
Again, stipulations. There are quite a few legal loopholes that you have to learn about and what the stipulations are, and some of the jargon can get a tad confusing.
Allow me to break it down for you in more simplistic terms.
When is a home security system considered tax deductible?
Is your home also your primary place of business? If so, then adding a security system is considered a capital investment that can be written off at tax time.
You cannot be a remote employee working for a bigger organization though, and the security system needs to cover all windows and doors.
And you can only deduct the part of the system that covers the space in your home where you do your business.
Any expenses you incur to maintain and monitor your system can also be written off.
So, if you pay a monthly subscription fee to something like Google Nest, you can write that off.
When people do this, they typically do a depreciation deduction for the cost of the security system related exclusively to the place where they conduct their business in the home.
Are rental properties with security cameras tax deductible?
Rental properties also count if this is your primary place of business. This basically works the same way that it would for a home.
Can a detached building with a security system be a capital improvement?
If you work in a detached building – such as a garage or a studio – with a security system, it is something you can write off on your taxes.
Again, it only counts if this is your primary place of business and if all the windows and doors are covered.
What are the deduction limits?
Your deduction is only going to be a partial one, and it is based on the area where you conduct your business within the home or detached building.
If your home security system is placed throughout your entire house, you can only deduct the equipment, monitoring, and maintenance on the part that covers your home office or business space.
To calculate this percentage, you need to use your home office area’s square footage in comparison with your home’s total square footage.
How do you claim your home’s security system on your taxes?
You will need to look at Schedule C, line 30 for where to input your information on your home security system.
This is where you will itemize that deduction.
How can you save money on a new home security system?
Thinking about buying a new home security system this year? It is a smart investment that can end up saving you money in the long-run and give you some peace of mind.
A lot of home security companies will offer discounts and run special offers.
Some offer long-term contracts, and you can save money by only covering security entry points or the first floor of your home.
Also, if you decide to fully self-monitor, you won’t get stuck with any monthly fees.
You can also go camera-free or use cheaper camera models to reduce your costs.
There are affordable systems out there; it really just depends on the type of package you buy from a manufacturer/security company.
Things To Consider
Almost half of all adults living in the United States have had packages stolen from their homes.
This can cost you hundreds, if not thousands, of dollars in losses.
If you’re lucky, the company sending you the package will send a replacement free of charge.
But this isn’t always the case. Buying a home security system can help protect from theft or at least give investigating officers helpful information as to the identity of the thief.
There are a lot of benefits of a capital improvement, as it can increase the market value of your home.
But, since installing security cameras isn’t considered a capital improvement, it won’t do anything for your home’s market value.
However, it can give you some peace of mind while you’re away or asleep, protecting your home and family from unwanted intruders.