November is the best time to take advantage of Section 179 of the IRS Tax Code by buying NxtWall demountable walls and installing them before the end of the year. When comparing demountable wall systems to conventional drywall constructed walls, a common misconception is that demountable walls are more expensive. Although demountable walls initially can cost more per linear foot than standard construction, the additional cost is offset by reduced build-out time and an accelerated depreciation in Section 179 of the IRS Tax Code.The key to unlocking Section 179 is that demountable walls are classified as furniture and fixtures. This designation allows them to be depreciated over 7 years versus conventional drywall construction, which is classified as a structural component of a building and therefore must be depreciated over 39 years.
In addition to the decrease in depreciable life- furniture, fixtures and NxtWall demountable walls qualify for the Section 179 deduction and bonus depreciation. The use of the Section 179 tax deduction and the added bonus depreciation may allow a company to expense 100% of the wall’s cost in the first year. Before Section 179, accountants would depreciate assets at 20% per year for 5 years. But under Section 179, a company can now write-off 100% of depreciation in the first year, if the purchase is under $500,000. If the purchase goes over $500,000 a bonus depreciation deduction can be used, in addition, to the standard Section 179 deduction. A company can take advantage of these benefits whether they pay cash or finance the purchase.
$100,000 in net income – $100,000 in depreciation expense = $0 in net income.
$0 in net income = $0 in tax dollars owed the IRS and therefore,
Company A saved $35,000.
NxtWall Tax Deduction Example:
|Cost of Wall Systems||$700,000|
|Section 179 Deduction||$500,000|
|Bonus Depreciation Deduction||$100,000|
|Normal First Year Depreciation||$20,000|
|Total First Year Depreciation||$620,000|
|First Year Cash Savings||$217,000|
|First Year Cash Requirement||$483,000|
Visit NxtWall’s Tax Savings Calculator below and see what your tax savings could be on your NxtWall wall system project today!Try NxtWall’s Online 2016 Tax Savings Calculator
* Tax rules are complex and depend on your individual situation. The NxtWall Tax Saving Calculator is for illustrative purposes only. Information shown with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. Consult your tax advisor to see how financing and Section 179 can benefit you.