Can smart design decisions actually save your business money? In this episode, CPA Brian Werner of BRW Tax and Accounting joins us to demystify how interior upgrades—like office furniture, fixtures, and even gym equipment—can come with major tax benefits. We break down Section 179, bonus depreciation, and the $2,500 expense threshold, while clarifying when to expense vs. capitalize purchases. Learn how early planning with your designer and CPA can turn your workspace improvements into strategic financial wins.
For expert tax advice, contact Brian at 719-358-2360, email contactus@brwtax.com, or visit their website: https://www.brwtax.com/.
Happy New Year everybody. It's January 2025, and I'm excited. I'm excited. I think this officially, we can make the rules because this is our podcast, that's right. So this is season two, that's right, season two. We have a whole season under our belts. Anyways, for those of you who are just joining us, my name is Randi Lynn Johnson. I work with Pasley Commercial Interiors and I have with me the illustrious Robin Pazley. Hello, founder, principal designer, all things amazing. And, if you remember, we ended the year starting to bring in other business experts because we want to help business owners in all ways with their design and growth and all, but also, how can we help them with things that they're coming up against? Yes, and so we had HB Pasley the illustrious, the infamous, yes infamous is right.
Oh yeah, and today, you heard him just now. Who do we have Randi Lynn,?
Brian Werner with us.
He is a CPA locally and the name of his company is BRW Tax and Accounting.
And for people that don't know what a CPA is, it's a Certified Public Accountant.
Not a certified pain in their Beep Beep.
That's great Well.
I guess it depends on the day.
True Taxes, all things are on the day.
True Taxes. All things are death and taxes, yes, but they're important, and we have great people like Brian in our corner to help us walk through things Exactly. So today we're breaking down how the right interior design choices can have an impact not just on your workspace, but also on your taxes. So if you're a business owner, you don't want to miss this one. We're going to talk about ways that interior design improvements affect taxes, like I just said, and how to depreciate investments in interior design. So that's what you have to look forward to, because it's important.
Yes, All right, big dollars could be on the line, so you got to make sure that you do it properly.
Yeah Well, let's just jump right in. Let's talk about examples of deductible expenses Furniture upgrades. So you're making a furniture upgrade. Why, Robin? Why would you make a?
Oh, because you're adding new staff, new work staff, cause you're growing, which is what we always want for you, and so you hire new people. You need new work stations Go yes.
So, yes, so when, when you have a business that's growing, you're going to have to acquire furniture. You know you've got equipment and then of course, you know if your space is outdated you're going to have your improvements. So, most furniture, if it's under $2,500 when it comes to just one single item, you can pretty much expense that. That doesn't have to be depreciated, it doesn't have to be capitalized, it doesn't have to be pretty much reported to the IRS.
Now, once you go over that $2,500 limit so say you got to go and get like a really large conference table or something that's going to be more than that then at that point you would have to capitalize it. However, the IRS does give you certain depreciation like rules and guidelines that you can tap into. There's bonus depreciation, which right now is 60% for 2024. There's some chatter that they might bring back the 100% bonus depreciation at some juncture. However, if that's not enough depreciation and you need more tax savings, you could also utilize what's called Section 179, which is pretty much where you get elect to expense that entire piece of furniture.
I've heard of 179. Okay, that's another arm, because I knew that up to 100% you can deduct all for furniture business expenses.
Yes, yeah.
That's amazing, yep.
As long as we're not going over I believe it's around like 2 million they always adjust the cap or whatever, but as long as you're not, you know, acquiring more than $2 million worth of furniture, you're going to be just fine, Sure.
Awesome.
So same thing kind of goes with your equipment as well. So if you have any office equipment that you know maybe you needed to add, you know some extra like scanners, or you know you've got computers and such or whatever same thing, so long as it's under 2,500, you can expense it all. If, for some reason maybe you have to get something that's a little bit pricier than those, same rules would apply.
So that's awesome, yeah, now improvements, totally different game.
So if you're looking at like structural improvements, um, those are depreciated on over pretty much a longer period of time. Kind of depends on what you're doing, but I'm like we could be looking at, you know, a 39 year write-off period.
So so that's like if they purchase a building and they do major construction on the building, that's where that would come into place.
I almost kind of look at it as just for, like simplicity's sake, anything that's kind of like permanent in nature, so like your walls or like your ceilings, or if you have to do, like, you know, roof work and such, okay, and we can kind of discuss, you know that in a little more detail.
But so anything that's kind of like more permanent in nature, that's going to be, you know, kind of a okay, we need to fix it once, but then we don't have to really, hopefully, worry about it for a really long time. Now, if you're talking about like flooring, or if you're going to come in and you know you're going to add maybe some more kind of like things that can kind of be, you know, either replaced or removed, those have different rules as well. So, when it comes down to it, for simplicity's sake, if you're enhancing something so, for example, let's say you have an office space and let's say it's got some ratty looking carpet or whatever and you're like this carpet's like 30 years old, can't clean it anymore, it's starting to fall apart. They come in, they don't take it seriously, they're out. This carpet's like 30 years old, can't clean it anymore.
It's starting to like fall apart. People want to leave. They come in, they don't take us seriously, they're out, so it's affecting our business. That's exactly right.
Yeah, exactly. And you come in and you're like, okay, I still want to keep carpet, but we're just going to go ahead and replace the old carpet. A replacement is something that normally you can expense right away.
So a hundred percent a hundred percent doesn't have to be capitalized.
But let's say that you come in and that old, ratty carpet you're like I don't want to put carpet down, you know, I want to put some nice flooring in. Well, at that point, more than likely, you're probably enhancing the value of that space. So when you enhance the value of something, usually you have to capitalize that. That's like considered like a capitalizable improvement. And then you've got once again kind of different depreciation rules that may come and come into play at that point.
So so if we're enhancing, then we're looking at depreciating, and so that's going to be a different thing versus just replacement.
Okay, Exactly, and would that be the same rules applied to, let's say, we're going to redo the break room, we're getting all new cabinets and new sink and new fridge and everything, but it's just remove and replace.
Yes, okay, yes.
That's exciting news. That is exciting news. I hope all of you listening are paying attention. It's time to redo your break room. It's time to redo your break room. It's time Give the people what they want. So can you tell us what are things that wouldn't count? If I am trying to improve my office space. I mean desks that seems like a given Chairs. Is there any furniture or I don't know, design elements that we might be bringing to the table or that somebody might want, you know, for their to improve the visuals of their space. That would not apply.
Not really actually Really so, like if I want a water fountain. Sure Fish tank, sure Fish tank, sure. No, I mean, you're right, you're right.
Yeah.
Yeah, I mean people purchase, you know, like gym equipment for their offices. I mean I've been in attorney offices that have you know like a treadmill in it or whatever, and I mean you know, does that really have a business purpose? You know probably kind of pushing it or whatever.
It could be argued though.
Happier kind of pushing it or whatever. But, um, water fountains, fish tanks, I mean, your argument at that juncture is pretty much like hey, it's enhancing, it's making my space look, you know, warm and welcome. You know it's something that you know I'm utilizing to, you know, attract and retain my customer base and they really enjoy coming into my space. Cause I think, when it comes down to it, like, having your customers like come into your space can be a huge asset. And that depends on, like, is it a warm space? Is it, are you a hospital type of company?
Um, so, I think as long as yeah, um, now, of course, I think there are situations where you could run into that might seem to be a little, you know, kind of unnecessary, that you know governments could push back on those items. They could argue and be like, did you really need to have, you know, that particular? You know like, you know 100-foot, like TV, like you know screen, plasma, you know like high end or whatever, for maybe a space that's not appropriate. But, once again, if it serves a purpose and you've just like, well, this is what we use for our presentations right.
Yeah, you've got some kind of data or you know business plan that supports the use of it. Would branding fall? I'm assuming it would, but does branding and signage and all that fall into that same category?
Depends. So I mean usually branding, that's probably something that's just going to be considered a marketing expense Signage. It depends on who owns it and then it depends on, once again, what's the dollar amount Okay? So, for example, we've got one restaurant that we work with that ended up investing $60,000 into their restaurant signage because they're off of the interstate and they wanted something that was like you know, that people could see pretty much and maybe even attract people to come off of I-25 and go to their restaurant. So that was one we had to capitalize and depreciate over time.
So, yeah, so cause we work with um companies all the time and we integrate their branding into their design, and often it's not even branding, it's more like wall art installed. That would fall into that, yes or no?
Well, depends. Yeah, you know, can you remove it? Is it kind of more permanent, gotcha? So if it's, removable, then so if it's removable, what type of piece of art are we talking here?
Like vinyl that is applied to the wall, kind of like you see in our space here.
Okay, okay, I would say under $2,500,. You're probably in more of like it's office decor or even if it is part of your branding or whatever. Once you get over that $2,500 limit, then you're probably looking at capitalizing that item and depreciating it.
But if it's removable, which means you can just take it to the next place, then where does that fall?
So if it's removable, then I mean, if you're just moving to the space and say it was over the $2,500, you're still depreciating.
You still own it, so it's FF&E at that point.
Yes.
Remind our listeners with FF&E at that point.
Yes, okay, yes, remind our listeners with FF&E, Fixtures, furniture and equipment.
Yes, good call, that's not industry class right.
All the acronyms of the world right? Definitely there's so many. I ask that question all the time. What does that stand for?
Claude, you for being humble enough to ask. Yes, because are there any mistakes that people should avoid when claiming design related expenses?
Yes, Just assuming that everything can be written off and like expensed right away. So anybody that we work with we always say pick up the phone first, you know, before we go through like a major redesign of our space because we want to make sure that we're going to work, you know, directly with the designer, work with our client on, you know, okay, what are we going to be doing, what type of money are we investing, and then we can kind of go through the associated you know rules. Can we expense that? Do we have to depreciate that? If we have to depreciate it, can we get some of the accelerated bonus like Section 179 depreciation write-offs that might be available? So we want to be involved pretty much before the money starts being invested because we can plan appropriately.
Yeah, that's right and everybody can be aware of, like, okay, this is going to save me this much in taxes, but then maybe there's that bucket that we're going to have to write off and we're not going to be able to get the savings right away. We're only going to get a portion, you know, for maybe five, seven years, could even be longer than that.
So what I'm hearing is ask you early.
Yes, that's exactly right, I always tell people and everybody that I work with I'm like call me first sure, because then we can kind of plan and just at least make people aware of, like okay, you know, the more knowledge they have before they start making decisions and potentially make a decision that they don't consult us on.
Yeah, so we like, yeah, we're big planners, sure I don't like any major surprises in my world, because usually major surprises results in people paying a lot more money to the government than they necessarily have to Like. Our philosophy is pretty much keeping as much money on Main Street as legally possible Because that benefits our community.
It does benefit our community. I love that approach.
It does it's. I like that too. It does benefit our community. It benefits everybody. I love that approach it does.
That's why Colorado Springs is so great, because we have people like Brian helping all the business owners Absolutely.
I want to make sure, Brian, that people know how to contact you.
Yes, so we're located in downtown Colorado Springs. Our phone number is 719-358-2360. You can also email us at contactus at brwtaxcom, or, if you want to pop into our beautiful office location that we have, it's 523 South Cascade Avenue.
And it is beautiful. I had to come over just to see it because you described it to me. I was like I have to be in there.
So I actually say the same thing about your space too, to everybody.
That's awesome, well, good, okay, so we talked about. We talked a lot about a lot of different things. So let's recap it just for our listeners. So if they because like me, I'm like I don't know so much, like I need those, I tell my husband too, when we're having discussions, like, okay, we talked about a lot, bullet point it for me, bullet point it, I like that. Yes, yeah.
use TMI. Sometimes I'm like whoa too much information. Can we take a pause and like yeah, let's recap, Make sure that everybody understands and we're all on the same page.
So the three points number one first thing you're going to do is sit down with your CPA Ideally even your CPA and designer and you can be discussing, throwing out ideas, and then know what is going to be deductible, write off et cetera. But contact the CPA before you make big decisions. I like that yes. Good idea, definitely Number two Robin. Yes.
Number two what I heard you say, brian, was that everything that has to do with upgrading your space furniture, construction expenses, anything that's beautifying and really in the wheelhouse of what we do is tax deductible, which is great, because we love helping people make the right investment in their space.
Yes.
Awesome.
Brian, do you have a third one for the people?
Yes. So when it comes to, yes, furniture equipment you know a lot of your office equipment as long as it's under $2,500, you can expense it right away. Anything above you're going to have to capitalize it. But there could be accelerated depreciation write-offs, like the bonus depreciation, section 179 depreciation. So there are ways to pretty much still expense it even though you're having to capitalize it and technically depreciate it. So there are those, you know, avenues that the IRS does provide to you. And when it comes to like you know your bigger items, like construction and renovation and like some of your structural improvements and such, you know once again, you capitalize it, you depreciate it, but some of them can be accelerated. So, yes, definitely work with your interior design and with your CPA just to make sure you've got a good game plan in place and you know what to expect.
That's awesome, awesome, great. Well, thank you so much for your time today. We're going to have you back and ask you a couple more questions on our next episode, but thank you for your time today and again, if you have questions or you want to contact Brian, I'm going to post that in the show notes and so all your contact info will be there and people can reach out, because you are an expert and you can help. Thanks so much, brian.
Definitely. Thank you for having me.
