You may be concerned about property crime and want to protect your home. And if you run a home business, you may have special equipment or inventory that is especially important to protect. That's smart: Property crimes caused losses of more than $14 billion in 2014, the most recent year for which information is available.
While you can save money on your home insurance if you have a security system, you may be looking for other ways to make the security system you want more affordable. With the home office, there's the possibility of a tax deduction to help you save.
Why Home Security Systems are NOT Deductible
It's true that there are some miscellaneous household expenses that you can itemize and deduct if you file a 1040 or 1040NR form. But IRS publication 529 outlines which types of household expenditures are not deductible, and a home security system is clearly on the list. Therefore, if you're installing a system only for residential use, you won't get a tax break.
Some creative homeowners have asked about listing a home security system as a home improvement expense. But unfortunately, it doesn't qualify for that deduction either, as it's not a permanent improvement that adds to the value of your home.
Why Home Business Security Systems MAY Be Deductible
If you run a home business, you may have business assets to protect, and therefore an even greater reason to have a security system installed. And according to the IRS, in some cases that's okay. The business use of your home is covered in Publication 587, and lists business equipment that is used at least 50 percent of the time for your business as a possible deduction.
You must use the actual expenses method of determining your business deduction. With this method, you won't get to deduct the full cost of the system, but you can calculate the amount of time you're using the security system for business only, such as the hours you are open or the hours you typically work. That percentage of time the system is covering your business can be used for figuring the percent of the system cost that you can deduct.
In most cases, it will be to your advantage to consult a qualified tax accountant to ensure you can deduct a home security system as a home business expense. Your home security system installer may also have some resources available about the use of systems to protect home offices.
Contact a business like Digital Security for more information.