Tax incentives: Why Lada Cube costs less than the sticker price.
We hear it all the time, "your walls cost more, why would I pay $156/sq.ft. when I can pay $97/sq.ft?" We get it. Why the heck would anyone purchase a demountable wall that cost more? Lada Cube's demountable insulated panels or better known as DIPS can seem expensive compared to traditional stick-built construction, but only on the surface...
Thanks to the United States Internal Revenue Service, Modified Accelerated Cost Recovery System, Lada Cube's are allowed to be classified as "tangible property" with shorter 7-year depreciable life for tax purposes. Now compare that to 39-year depreciation for stick-built construction.
To truly understand these savings, lets look at the Calculating Value: Short and Long-Term Present Value (PV) Costs.
More costly than conventional stick-built construction on the surface, DIPS offer a fairly clear return on investment for organizations that keep an eye on their long-term facilities strategy. That said, there are several additional benefits of the investment that are realized upfront:
- Reduced project timelines – DIPS on a parallel timeline as interior construction is underway, wall systems are delivered to the site and installed quickly without invading the building structure.
- Reduced onsite trades – DIPS require fewer tradespeople onsite.
- Reduced waste – DIPS bring minimal waste to the worksite and they are virtually dust-free to install.
- Accommodate design changes – Changes cost money onsite; the flexibility of DIPS minimizes the financial impact and maximizes facility potential even after construction has begun.
- LEED Credits – For organizations looking for LEED certification, DIPS contribute to several point credits and have recently qualified for additional consideration in LEED v4.
Longer term benefits are also compelling:
- Ability to reconfigure – As business requirements change, facilities requirements change. An organization need not have intense churn to realize value from DIPS. In 2010, the International Facility Management Association estimated that the average organizational churn rate was once every three years. If planned well, organizations may be able to reconfigure DIPS without hiring trades and without displacing occupants.
- Tax benefits – As mentioned above, DIPS are technically considered furniture and treated as such by the Internal Revenue Service. Depreciation on DIPS can be claimed after seven years—as opposed to 39 years for conventional drywall construction (or never if the organization does not own its building).