Profitable
The U.S. Senate, authors and superior authority of our tax laws, succinctly ruled in Senate Report #95 “movable & removable partitions are tangible personal property and not a structural component”, thus qualifying them for shorter class life depreciation than conventionally installed drywall— 5 years or less as opposed to 27.5 years (residential rental property) or 39 years (commercial buildings.) Notably, in PLR-110197-13 the IRS relied on Senate Report #95 as support for demountable zip type drywall partitions as personal property.
Cash Tax Benefits
By changing the drywall tape on your project to Green Zip®, depreciating the cost of non-load bearing walls can be significantly accelerated to create Cash Tax Benefits of $5 to $15+ per floor area square feet.
Property Depreciation
Commercial buildings and residential rental property have a depreciable life of 39 years and 27.5 years, respectively. For tax purposes, this applies to the permanent structural elements of the building.
Nonstructural Personal Property
Nonstructural Personal Property elements have a much shorter recovery period — either five-year or seven-year class.4
The IRS, in PLR-110197-13, allow not only the classification of the demountable interior zip type drywall partitions as personal property but also the cost of the glass, doors, frames and other hardware, wall finishes and utilities: electrical, plumbing, and cabling, components related to the zip type demountable drywall.
The result can be a near-term reduction in tax liability and a meaningful increase in cash flow for the investor/owner of a commercial building or residential rental property in the design, early-stage construction or renovation phase.
4 The Tax Cuts and Jobs Act allows more rapid depreciation and thus greater benefit.
Using our product can help the environment
Business Week reports the manufacture of drywall alone “accounts for 1% of all the energy used by U.S. industry, and thus a comparable percentage of all industry emissions.” An estimated 26% of the waste in a construction landfill is drywall.
- Green Zip has been professionally recognized by the sustainable building industry. In 2010, Green Zip® received the prestigious R+D Award from The Journal of the American Institute of Architects.
- Green Zip® has also received new product awards from both the Environmental Protective Agency (EPA) and the American Institute of Architects (AIA) in their Lifecycle Building Challenge.
- Green Zip® construction technology is recognized as being eligible for LEED credit by the US Green Building Council (USGBC).
Reduces the manufacture of new drywall and the associated environmental impact
Provides a means to comply with local landfill diversion and green building requirements
Diverts tons of drywall from landfills where it can leech poisonous Hydrogen Sulfide Gas, a greenhouse gas, into our air and water as it decomposes
Reduces carbon emissions associated with the manufacture of drywall and the transportation of drywall waste to landfills
Makes healthier buildings by avoiding the metal and fiberglass dust and noise associated with demolition and allow easier access to internal parts of the building to assist in mold mitigation
Business intelligence that will change the way you manage your real estate construction portfolio
Green Zip® technology can reduce investors’ near-term tax liability and increase cash flow. For example, say a residential rental building costs $50 Million to build — and $5 million of that is considered “personal” property (i.e not part of the permanent building structure). The tax paying investor is able to depreciate that $5 million of expense on the property over five4 years. The rest of the building cost — $45 million — depreciates over 27.5 years, providing a much slower tax deduction savings (i.e. a slower rate of return).
Now take that same example — and using Green Zip® — say an additional $10 million in construction expense can now be reclassified as “personal” property. The tax paying investor is now able to depreciate $15 million of expenses on the property over five4 years. On an after-tax basis (assuming a 39% tax rate), the accelerated depreciation on that additional $10 million in expenses would amount to a savings of $3.9 million over 5 years. In other words, the investor reduced near-term tax liability — and thus increased cash flow — by $3.9 million over the five-year4 period. This highlights the powerful benefit of installing walls with Green Zip® and utilizing a Cost Segregation study to properly classify assets in accordance with IRS guidelines.
- Accelerate depreciation and Net Present Value
- Reduce near-term tax liability
- Increase Cash Flow
- Reduce retrofitting costs
There is an additional financial benefit to installing Green Zip® drywall partitions.
When the building is sold, the new owner can claim the total amount of the accelerated depreciation identified in the cost segregation study. This amount (recalculated on the basis of the property’s new purchase price) still includes the demountable drywall partitions and the elements on, in, and behind them. This gives the building additional value and may provide the seller with a competitive advantage.
4 The Tax Cuts and Jobs Act allows more rapid depreciation and thus greater benefit.
