Is Home Security Tax Deductible?

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The cost of acquiring, installing and maintaining a security system in your home isn't deductible for most taxpayers who itemize. One exception applies if part of your home is used regularly and exclusively for business purposes. However, even if you don't have a home office, the security system's purchase price and installation fee increases the tax basis in your home.

Capitalize Home Security Cost

When you have to capitalize a cost, such as for installing a home security system, it increases your tax basis in the property. Having a high tax basis is beneficial when you sell the property as the Internal Revenue Service measures your gain as the selling price minus your tax basis. Suppose, for example, you purchase a new home for $150,000 and immediately acquire a security system that costs $2,500 to purchase and install. If you sell this home, your potentially taxable gain is now calculated on the amount in excess of $152,500 rather than $150,000. The monthly maintenance fees you pay, however, are nondeductible and don't increase your tax basis.

Part of Home Office Deduction

If you take a home office deduction, you can deduct a portion of the maintenance fees in the same proportion as you allocate other household costs between business and personal. The cost of purchasing and installing the security system is deductible at the same proportion, however, it's claimed over time through depreciation deductions since it's a capitalized cost.


About the Author

Michael Marz has worked in the financial sector since 2002, specializing in wealth and estate planning. After spending six years working for a large investment bank and an accounting firm, Marz is now self-employed as a consultant, focusing on complex estate and gift tax compliance and planning.

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