Maximize Your Business Tax Savings with a Seismic Retrofit
Seismic retrofitting is not only an investment in your building’s safety but also a smart way to save money. By leveraging tax deductions, depreciation benefits, and local incentives, your business can reduce upfront costs while improving long-term financial stability.
In this article, we’ll explore how seismic retrofits can help your business make the most of available incentives. Let’s dive into how you can take advantage of this opportunity.
Why Should You Consider Seismic Retrofitting?
For commercial and industrial buildings, retrofitting is a critical investment to safeguard employees, protect property, and comply with local regulations.
A seismic retrofit involves strengthening a building’s structure to reduce the risk of earthquake damage. Common solutions include:
- Strengthening connections
- Addressing drag lines and re-entrant corners
- Adding shear walls
- Installing steel bracing
- Utilizing moment frames
- Applying fiber reinforcement
- Implementing foundation bolting
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Did You Know?
Studies show that every $1 spent on seismic retrofitting can save businesses up to $4 in future earthquake damage costs. _______________________________________________________
How Seismic Retrofitting Helps You Save on Taxes
While seismic retrofitting protects your building, it can also help you save money when tax season arrives. Here’s how:
1. Capital Improvement Deductions
Most seismic retrofits qualify as capital improvements, meaning businesses must capitalize the expense and recover costs over time through depreciation.
- How it works: Under the Modified Accelerated Cost Recovery System (MACRS), commercial buildings depreciate structural improvements over 39 years.
- Benefit: This allows businesses to deduct a portion of the retrofit expense annually, lowering taxable income over time.
2. Federal Tax Deductions and Depreciation Rules
While earthquake retrofits generally do not qualify for Section 179 deductions, businesses may be able to claim depreciation benefits under federal tax rules:
- Bonus Depreciation (IRS Section 168(k)): Some non-structural improvements made during a seismic retrofit project (e.g., tenant improvements, lighting, HVAC upgrades) may qualify for 100% bonus depreciation in the year incurred.
- Repair vs. Capitalization: Minor repairs that do not extend the life of a building may be immediately deductible instead of depreciated over time.
3. Local and State-Level Tax Incentives
Many states and cities offer tax incentives to encourage seismic retrofitting. These incentives can include:
- Property tax rebates for buildings that complete seismic upgrades
- State tax credits for seismic retrofitting expenses
- Grants or low-interest financing to offset retrofit costs
For example, San Francisco offers a PACE financing option that allows property owners to finance seismic retrofits through a property tax assessment, with costs eligible for 100% passthrough to tenants under rent control.
Check with your state’s tax authority or a tax professional to identify available programs.
4. Insurance Discounts and Financial Savings
Beyond tax savings, seismic retrofits can reduce ongoing costs:
- Lower insurance premiums: Many commercial insurance providers offer discounts for retrofitted buildings due to reduced earthquake risk.
- Increased property value: Retrofitting makes buildings more attractive to buyers and tenants, boosting resale value.
- Regulatory compliance: Future building codes may require retrofitting, making early upgrades a cost-effective decision.
How to Maximize Your Seismic Retrofit Tax Savings
To make sure you’re fully taking advantage of seismic retrofit tax credits and deductions, follow these steps:
- Consult a tax professional: Work with an accountant or tax advisor to ensure you’re claiming all available tax credits and deductions.
- Keep detailed records: Maintain accurate records of all retrofit-related expenses, including materials, labor, and permits.
- Research state-level incentives: Look into state-specific programs that may offer additional savings.
- Consider financing options: Some programs offer low-interest loans or grants that can help you fund your seismic retrofit project.
Taking these proactive steps ensures that your business maximizes the available tax benefits while making a long-term investment in building safety and financial stability.
Planning ahead and maintaining proper documentation will help streamline the process and improve your return on investment.
Protect Your Business with a Seismic Retrofit Today
Seismic retrofitting is an investment in both safety and financial security. Many business owners worry about navigating their retrofit projects, but Saunders Seismic makes the process simple. Our clients often say, “I didn’t know it could be so easy!” Our team ensures you get expert solutions tailored to your needs.
With decades of experience helping clients strengthen their buildings and save money, we take the guesswork out of retrofitting.
Now is the perfect time to act if you’re considering a commercial or industrial seismic retrofit.
Contact Saunders Seismic today to learn how you can strengthen your building for the future … now.