Unlocking the Tax Advantages of Modular Construction


The Tax Advantages of Modular Construction

Modular construction has several benefits - such as easy installation, a reliable build process, and customizability – but you may not know that modular construction could also help you save on tax expenses.

Unlike traditional stick-built buildings, modular buildings do not fall under the category of 'permanent fixture.' The panel construction of these buildings makes them moveable, which is why they can be classified as 'tangible property' under current tax law. This classification yields two key tax advantages.

Faster Depreciation

Under the Modified Accelerated Cost Recovery System (MACRS), conventional construction depreciates after 39 years. Compare this to the building depreciation life of modular construction, which is only seven years. That's less than a fifth of the conventional timeframe.


If a fast building depreciation life wasn't enough, Section 179 ensures you'll save a significant portion of your tax income with modular purchases. As of 2023, section 179 will write off $1,160,000 of your purchase. After that, this write-off will cover progressively less until you reach a hard cap of $2,890,000 of assets in service.

In addition to that write-off, Section 179 also provides an 80% depreciation bonus to qualifying purchases as of 2023. 

Running the Numbers

For example, say you purchased $4,000,000 in modular construction materials. Let's also assume your company is in the 21% tax bracket.

Section 179 would immediately remove $50,000 of that purchase (remember, coverage decreases with purchases over $1,160,000). After that, bonus depreciation deductions kick in, removing $3,210,000.00 in taxes.

Accounting for income tax, you would save $674,100 on your purchase. You just went from $4,000,000 to $3,325,900 in expenses, all because you went modular.  

If you want to see what you can save from Section 179, click here.

Quality Construction at Greater Savings

The bottom line is that conventional construction would need to be 17% less on purchase to match the value of a product by Panel Built Inc. That means a greater return on investment while still getting quality construction.

To take advantage of the benefits of modular construction, consider working with the expert team at Panel Built Inc. Visit our product page to see what you could build at a savings. You can also contact our team at 800.636.3873, email info@panelbuilt.com, or talk to use using the LiveChat feature at the bottom of your screen.

From modular offices to military tower systems, Panel Built has experience engineering, designing, and installing structures for various commercial, military, government, and industrial customers. Panel Built operates under one mission, "To Solve Our Customers' Space Needs With Excellence And Great Customer Service."