Depreciation or Write-Off?
US: Under IRS Section 179 rules, demountable walls qualify for accelerated tax depreciation. Demountable walls fall under asset class 00.11 which includes furniture and fixtures that are not a structural component of a building, moveable, not integral to the building structure and can be relocated without considerable damage. They are considered tangible personal property. This contrasts with “drywall” construction which is considered a structural component. Glass and solid glass demountable wall systems qualify for a 5-to-7-year depreciation schedule as compared to 39 years for drywall construction.
Demountable walls can be “depreciated” or “written-off” in two ways:
- Straight line depreciation. Divide cost of installed wall by 7 years and depreciate each year by that amount. Spreads out the tax benefit over several years and typically used for long term assets such as demountable walls.
- Write-off Section 179 (Expense Deduction). This is a one-time deduction of the full expense in the year it incurred rather than over 7 years. Typically used for smaller noncapital projects improving smaller companies cash flow options. It is subject to IRS limits and thresholds.
The costs of installation can also be capitalized and included in the depreciation. If the walls are relocated their remaining depreciable value carries over to the new location. Refer to IRS Publication 946: “How to depreciate property”. Always consult a tax advisor for the best option.
Canada: In Canada there are no provisions for demountable partition systems to be depreciated as they are considered to be an integral part of the building.
Other Factors that Benefit the Consumer by using Demountable Partition Systems
Relocation: Designed for easy fast installation and relocation. Quickly disassembled without disruption to the workplace
Initial Cost: The cost of demountable systems is initially higher than traditional drywall but the long-term savings from reduced renovation costs and the ability to reuse the walls will offset these expenses.
Natural Light: Glass Demountable partition systems provide natural light in the workplace that increases the health of associates, reduces stress while contributing to all employee’s sense of well-being and contentment.
Cost Savings on Office Downtime: The removal and replacement of drywall partitions requires much demolition, office downtime, mess, and clutter. Demountable systems are often taken down and relocated outside normal working hours with new areas up and running the next day.
Asset Value Retention: Demountable partition systems retain value over time and can even be sold or reused in a different location unlike permanent drywall partitions.
Maintenance and Repairs: Demountable partition systems are easier to maintain and repair than traditional drywall. Any issues can be addressed quickly and efficiently minimizing downtimes.
Aesthetic Appeal: Demountable wall systems offer current, modern, sleek, aesthetically appealing flexible designs with many options. Coverings are available in glass, wood, laminates, vinyls, and fabrics or customized based on the consumers desires.
Security and Privacy: Demountable partition systems can be designed to enhance security providing protection for sensitive areas. Glass walls can be provided with technology that will turn the glass opaque at the touch of a button or provided with a film for additional privacy.
Sustainability: Demountable partition systems are constructed from environmentally friendly materials. They do not require demolition or destruction of existing structure for reconfiguration. They also help in earning LEED credits for waste reduction and material reuse.
Employee Productivity and Well-Being: Demountable walls improve employee productivity by providing privacy and high sound ratings (STC). Glass demountables allow more natural light to enter which reduces stress and increases employee well-being.
Flexibility, Relocation and Adaptability: Demountable wall systems are flexible and easily reconfigured or relocated to other locations. Their use avoids the need for costly demolition, office disruption and the purchase of new materials to replace a drywall system. They become a smart long-term investment and allows owners to future proof their office areas. Mess-free.
In summary, Demountable Wall Systems:
- Are more cost effective.
- Better for the health and productivity of all associates.
- Have great acoustic and privacy options.
- Able to be relocated and reused.
- No muss – no fuss during relocation or reconfiguration.
- Can be “leased” like furniture or “depreciated/written” off over shorter periods of time.
Overall – a better investment now and into the future than drywall partitions.
