Interior Partitions

A while ago, during one of my evening reads, I discovered “Taking Back the Market | Equipping Glaziers to Compete in Division 10,” which explores interior partition work, commonly referred to as Division 10 in the glazing industry.

This division, known as “specialties” by building professionals, bridges the gap between finishes and furnishings, addressing smaller, but critical, building components. The article, which is one of the best pieces on interior partitions I’ve read in a while, highlights the growing need for glaziers to reclaim market share, as the shift of moving glass partitions to Division 10 specifications has increasingly excluded glazing contractors.

While the article argued that glaziers could reclaim market share by knowing how to work within Division 10 supply chains, an alternative approach is for glaziers to encourage owners to specify interior glass partitions under Division 8. The thoughts outlined in this article are not meant to replace the tactics presented in “Taking Back the Market” but rather to supplement them with another tactic.

Tax Deductions Aren’t Division-Dependent

One key factor influencing this trend is the tax advantage of specifying interior glass partitions in Division 10. Demountable interior partitions, categorized as tenant personal property, are eligible for accelerated depreciation under Section 179 of the U.S. Internal Revenue Service tax code. This allows building owners to expense the cost of these partitions over seven years, or even in the first year, rather than the standard 39 years (in commercial buildings) for permanent fixtures. However, this does not mean the tax benefit is tied to the product’s classification under Division 10.

A common misconception is that specifying interior glass partitions in Division 10 is necessary to qualify for accelerated depreciation. This simply isn’t true. Some time ago, I looked into this with my contacts in the tax world, and this is what I heard: “The IRS determines eligibility based on the product’s characteristics and installation, not its specification division,” according to William Harbeson, director of energy incentives, Capstan Tax Strategies.

In other words, owners can still claim the tax deduction for demountable partitions, regardless of whether they are specified under Division 10 or Division 8. From a tax perspective, we are determining whether the interior partitions are improvements, furniture and fixtures, or equipment. In other words, does the partition serve the business’ function (personal property) or the building’s structure? This determination could be made in many ways, including a cost segregation analysis, a determination by a tax professional, a consultant, or by the owner. However, the IRS ultimately has the authority to accept or challenge a company’s depreciation classification through an audit process, just like it would with any other tax information an owner provides.

If the interior partition was listed under Division 10, it may be easier to defend the position that the wall is non-permanent and movable. However, this can be done when listed in Division 8 as well. Some things that may help with this are adding the interior partitions after the original construction contract, describing the products or system as removable or modular, having a tenant-specific design, and having a cost segregation study done. If the IRS sees the interior partitions as an essential piece of the building, they may be categorized under 39-year depreciation, so how they are described, sold and installed matters.

Additionally, the Architectural Glass Institute outlined the criteria for demountable walls to qualify for accelerated depreciation:

• Non-permanent installation: They are not intended to remain permanently in place.
• Ease of installation and removal: They can be installed and removed quickly and with little expense.
• No damage upon removal: Their removal does not cause damage to the building.
• Non-load bearing: They do not support any structural load.
• Passive function: They serve the passive function of protecting tenant assets.
• Post-construction installation: They are not installed during the building's initial construction.
• Tenant-specific: They are not meant to remain when a tenant vacates the space.

These qualifications are based on the product’s design and use, not its placement in the MasterFormat specification. Therefore, specifying interior glass partitions under Division 8 does not disqualify them from these tax benefits.

Why Division 8 Makes More Sense

As I said, an alternative approach to regain market share for glaziers involves encouraging owners to specify interior glass partitions under Division 8. Division 8—traditionally focused on doors, windows, and openings—is a natural fit for these systems. Glass partitions often involve intricate glass and aluminum components that require the specialized expertise of glazing contractors, professionals who already operate extensively within Division 8.

Shifting these specifications to Division 8 brings a couple of advantages:

1.    Expert installation: Glazing contractors are uniquely qualified to handle the precision required for glass and aluminum systems, ensuring durability, quality and timely installation.
2.    Maintained tax benefits: As previously noted, specification division does not affect the ability to claim accelerated depreciation, meaning owners can enjoy tax savings while prioritizing quality.

A Quality Assurance Argument

Specifying interior glass partitions under Division 8 does more than align the work with glazing contractors’ expertise, it enhances quality assurance. Division 10 often involves non-specialized vendors, such as furniture suppliers, who may lack the technical skills to install the more complex glass and aluminum systems. Glazing contractors can provide precise installation, minimizing the risks of misalignment, damage, system failures (such as missing STC goals) and project delays.

This focus on quality is a selling point for owners. Partnering with glazing contractors provides peace of mind that the final product will meet STC performance and aesthetic standards.

Educating the Industry

Most owners are not educated on this. Owners may lean on their vendors and tax professionals for advice. In this case, the vendors may be the furniture dealers that have likely driven the specification and sold most of the seven-year depreciation items directly to the owner. This creates a path of less resistance for the tax professional and the vendor.

However, it does not consider the quality of the installation. These interior partitions are complex and should be installed by architectural glass and metal installers, not the same folks who build desks and set up office chairs.

In this “other” avenue to reclaim market share, glaziers can address the misconceptions that have led to the dominance of Division 10 specifications. This involves educating owners, architects and designers about the flexibility of tax regulations and the advantages of Division 8. By emphasizing that tax benefits remain intact regardless of specification placement, glaziers can shift the focus to their expertise and the superior quality they offer. This is, of course, only one tool in the toolbox. Contract glaziers looking into increasing interior partition market share must look into all the avenues available, primarily showcasing the ability to offer a quality install better than anyone else in the construction industry.

The conversation around reclaiming market share for glaziers in the interior glass partition sector highlights the importance of relationships, education and quality assurance. While Division 10 specifications may have shifted some work away from glazing contractors, the tax advantages often cited as justification are not dependent on this classification. By advocating for specifications under Division 8, glaziers can align their expertise with the owner’s needs, ensuring quality while maintaining tax benefits for building owners. Educating stakeholders about these realities offers another way for glazing contractors to compete in the interior partition sector.