TL;DR
Yes, commercial security cameras are generally tax deductible as a business expense. Depending on your approach, they may qualify under Section 179 for an immediate deduction or be depreciated over time. Installation and service costs can also qualify. Keep personal use separated, document everything, and consult with a tax professional to avoid audit issues. Bonus: Some states offer additional incentives or rebates depending on location.
Why This Question Matters
Security cameras are a fixture in commercial spaces today. From preventing theft to reducing liability, they serve a clear business function. But with rising hardware, software, and labor costs, many business owners want to know if these investments can be recouped through tax deductions.
The short answer? Yes, but how and when you deduct the expense depends on your classification strategy and compliance with IRS rules. In this article, we walk through what qualifies, how to structure your deductions, and what pitfalls to avoid.
What the IRS Says About Security System Deductions
The IRS doesn’t list “security cameras” in its published examples of deductible business equipment. But under the broader umbrella of office and safety equipment, security systems qualify when they serve a legitimate business function.
Section 179 Deduction
This allows you to write off the full cost of qualifying equipment in the year it is placed into service, rather than depreciating it over multiple years. Commercial security cameras, recording devices, monitors, and cabling are typically eligible under this provision.
Depreciation as an Alternative
If you don’t use Section 179, the equipment is considered a capital asset and must be depreciated, often over five to seven years depending on how it’s classified. This spreads the deduction out, which some businesses may prefer for income smoothing purposes.
The determining factor is whether the cameras are viewed as stand-alone equipment or part of a permanent building improvement. The more integrated the system, the more likely it’s treated as a capital improvement with a longer depreciation schedule.
What Expenses Are (and Aren’t) Deductible
Knowing what qualifies and what doesn’t is where most businesses get tripped up. Here’s a breakdown.
Deductible Expenses
- Security Camera Hardware: Bullet, dome, and PTZ cameras qualify if used on commercial property.
- Recording Systems: NVRs, DVRs, and related storage devices.
- Installation Labor: Professional services for mounting, wiring, and integration.
- Monitoring Fees: If paid monthly or annually as part of ongoing security operations.
- Maintenance and Repairs: Costs for fixing or maintaining existing systems.
- Software Licenses: Surveillance management software or cloud storage fees.
Non-Deductible or Limited Expenses
- Equipment used for personal purposes, such as monitoring a home without a registered business.
- Luxury upgrades that don’t provide a clear business benefit.
- Monitoring systems used strictly for employee performance tracking without a safety component.
Always keep receipts and documentation, particularly for equipment installed in shared or mixed-use spaces.
Section 179 vs. Depreciation: What Makes Sense?
Both Section 179 and traditional depreciation get you to the same place: a tax deduction. But the timing and structure are different, and what you choose depends on your overall tax strategy.
When to Use Section 179
- You want an upfront deduction this tax year.
- Your equipment purchase won’t push you over the Section 179 limit ($1.22 million for 2025).
- You need to lower your taxable income significantly in a profitable year.
When Depreciation Works Better
- You’re spreading deductions over several years to align with expected revenue.
- Your total capital expenditures exceed Section 179 limits.
- The security system is part of a larger building project and better fits under long-term asset improvement.
Consulting with a CPA can help you make this call based on your filing structure (S Corp, LLC, sole proprietor, etc.).
Special Situations and Edge Cases
Not every installation is straightforward. Businesses operating in hybrid spaces or leasing locations need to consider a few exceptions.
Home-Based Businesses
If you’re operating from a residence, you can still deduct camera expenses, but only for the portion used exclusively for business. You’ll need to calculate square footage used for the business and apply that percentage to your deduction.
Mixed-Use Commercial Buildings
In a property that includes both retail and residential units, only cameras installed in the business-use zones are deductible. Documentation should clearly outline coverage zones and intended use.
Leaseholder vs. Property Owner
Tenants can deduct security equipment they purchase and install if it’s not reimbursed by the landlord. However, if the system becomes a permanent fixture, it may need to be capitalized and depreciated.
How to Prepare for the Write-Off
Good documentation is your best defense if audited. Follow these five steps to prepare your deduction correctly:
- Track All Costs: Hardware, labor, software, and service should be itemized.
- Note Service Start Dates: When the system became active matters for tax year eligibility.
- Label Assets: Group security gear under “Safety Equipment” or equivalent.
- Separate Personal Use: If there’s any non-commercial usage, segment it by percentage.
- File IRS Form 4562: This is the required form for Section 179 and depreciation claims.
Keeping digital copies of receipts and contracts can also help streamline your year-end tax prep.
Common Mistakes That Can Cost You
Even if you qualify for the deduction, missteps can reduce or eliminate your claim. Some of the most frequent errors include:
Misclassification
Lumping security equipment under IT or general equipment rather than tagging it as safety or property-related hardware can cause confusion during audits.
Lack of Segregation
Not clearly separating business from personal use leads to denied deductions. This is common in home-office or mixed-use environments.
Poor Documentation
Failing to save invoices or log installation dates can raise red flags. If you can’t prove it, you likely can’t deduct it.
Overlooking Service Fees
Some businesses only deduct hardware costs and miss out on monitoring or storage fees that qualify as recurring business expenses.
State and Local Incentives You Might Be Missing
Beyond federal deductions, some state and municipal programs offer rebates or credits related to safety, modernization, or energy use. These are less predictable but worth checking.
Potential Programs to Explore:
- Local Small Business Grants: Occasionally include provisions for security upgrades.
- Energy Efficiency Rebates: For low-power systems or solar-powered cameras.
- Crime Prevention Incentives: Some cities partner with business districts to offset camera install costs.
These vary by region, so check with your local economic development office or chamber of commerce.
Yes, You Can Deduct, Just Stay Smart About It
Security systems are a legitimate business expense, and the IRS offers multiple paths to recover your costs. Whether you opt for Section 179 or a longer depreciation schedule, the key is keeping records clean, separating personal and business usage, and aligning your filing strategy with your financial goals.
If you’re investing in security, don’t leave deductions on the table.
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