Background: We have a full basement and I have recently completed about half of it as a hang out spot for my teenage boys and their friends. The other side I use as a workshop and a place to store "stuff". The ceilings are about 9 feet high in the unfinished side and 8 feet high on the finished side. The unfinished side only has exposed floor joists, wiring, etc. The finished side has a suspended ceiling. The wall between us is finished on their side with 1/2" drywall. My side is bare studs. Also, the basement stairs are between us - finished on their side, unfinished on mine.
My Question: I want to finish my side of the wall and would prefer to use wood rather than sheetrock. But since my side has the furnace, do I have to install fire-rated drywall between us? I won't be able to completely close off one side from the other because the wall is perpendicular to the joists above, so even if I run drywall to the top of my wall, there's still about 10" of clearance between the joists. It seems that fire-rated drywall would not be necessary since any fire would just burn above the wall and into the other room.