Can You Write Off Security Cameras for Your Business Expenses?

Security cameras are a common investment for businesses looking to protect their property, employees, and assets. Given the cost of purchasing and installing these systems, many business owners wonder if they can deduct them as a business expense on their taxes.

Tax deductions can help reduce taxable income, but not all expenses qualify. Determining whether security cameras meet the necessary requirements is essential before claiming them.

Deduction Criteria

To qualify as a deductible business expense, a security camera system must meet the IRS definition of an “ordinary and necessary” expense under Section 162 of the Internal Revenue Code. This means the purchase must be common in the industry and useful for business operations. A retail store, for example, can justify security cameras as a theft prevention measure, while a home-based freelancer may struggle to prove the same necessity.

The expense must also be directly related to business use. Cameras installed in a commercial office or storefront clearly serve a business purpose. However, if placed in a mixed-use property, such as a home office, only the portion used exclusively for business can be deducted. The IRS is strict about personal use, and improper deductions can lead to audits or penalties.

The timing of the deduction depends on how the expense is categorized. If the total cost is under $2,500 per invoice or item, it may qualify for an immediate deduction under the de minimis safe harbor election. If the cost exceeds this threshold, it may need to be capitalized and depreciated over time instead of being deducted in full in the year of purchase.

Equipment Classification

Security cameras and related surveillance equipment are considered business assets rather than standard operating expenses. The IRS classifies these systems as tangible property, meaning they must be depreciated over time.

If cameras are permanently affixed to a building, such as being hardwired into a structure, they may be classified as real property improvements. In contrast, portable or wireless cameras could be categorized as personal property. Real property improvements typically have longer depreciation periods than personal property, which may qualify for accelerated depreciation.

Security cameras are generally recorded as fixed assets rather than expensed immediately. Under the Modified Accelerated Cost Recovery System (MACRS), surveillance equipment typically falls under the five- or seven-year property class, depending on its specific use and installation.

Methods of Recovery

Businesses have several options for recovering the cost of security cameras through tax incentives. One of the most beneficial is Section 179 of the Internal Revenue Code, which allows businesses to deduct the full purchase price of qualifying equipment in the year it is placed into service. As of 2024, the Section 179 deduction limit is $1.22 million, with a phase-out threshold beginning at $3.05 million in total equipment purchases.

For businesses exceeding Section 179 limits or preferring a gradual deduction, bonus depreciation is another option. In 2024, the bonus depreciation rate is 60%, allowing businesses to immediately expense 60% of the cost, with the remaining balance depreciated over the asset’s useful life. Bonus depreciation applies to new and used property with a depreciable life of 20 years or less.

Leasing security equipment can also provide tax benefits. If a business leases rather than purchases cameras, lease payments may be deductible as an operating expense, depending on the lease structure. A true lease, where the business does not assume ownership at the end of the term, allows for full deduction of lease payments. A capital lease, which functions more like financed ownership, requires capitalization of the asset with depreciation deductions instead. Understanding lease terms is important for selecting the most tax-efficient option.

Documentation Essentials

Proper documentation is necessary when claiming security camera expenses for tax purposes. The IRS requires businesses to substantiate deductions with clear records. Itemized invoices should detail the purchase price, installation costs, and any additional fees. These invoices must include vendor details, payment dates, and descriptions of the equipment to establish a direct business connection.

Proof of payment, such as bank statements, credit card receipts, or canceled checks, should be retained to verify the transaction. If payments were made in installments or through financing, businesses should keep loan agreements or lease contracts outlining the terms and total cost.

Depreciation schedules are required for businesses recovering costs over time. These schedules should reflect the asset’s classification, useful life, and the depreciation method applied. Taxpayers must maintain these records for the entire depreciation period, plus an additional three years after the asset is fully depreciated, as per IRS record-keeping guidelines under Publication 583.

Exclusions from Eligibility

While security camera expenses can often be deducted, certain circumstances may disqualify them. Cameras installed primarily for personal use are not deductible, even if they provide incidental business benefits. For example, if a business owner installs a surveillance system at their residence but claims it is for monitoring a home office, the IRS may disallow the deduction unless the cameras are used exclusively for business purposes.

Mixed-use properties, such as a home that doubles as a workspace, require careful allocation of expenses. Only the portion directly related to business operations can be deducted. The IRS closely scrutinizes deductions related to home-based businesses, making it important to maintain clear separation between personal and professional use.

Security systems that do not directly contribute to business operations may also be ineligible. If a company installs cameras in a location not actively used for business, such as a vacation property owned by the business but not regularly utilized for work, the IRS may reject the deduction. Similarly, if a business purchases security equipment but does not place it into service within the tax year, it cannot be deducted until it is actively used. Proper classification and documentation are necessary to ensure compliance with tax regulations.