Skip to content

Turning Your Remodeling Demolition Into A Big Fat Tax Write-Off

Everyone I know is looking for ways to maximize their tax write-offs.  For remodeling homeowners, the holy grail is environmentally sound demolition in which used building materials salvaged from your home are donated.  The value of used building material donations can often be substantial – large enough to pay for the costs of deconstruction…Now we’re talkin’.

Here’s how it works:

You hire a deconstruction contractor and an IRS qualified used building materials appraiser and also determine which  501(c)3 organization will receive the donated materials.

After interviewing several licensed contractors with deconstruction experience (i.e. one that will maximize the quantity of salvaged materials and minimize damage to them), verify licensing, insurance and bonding, check references then select a contractor you feel comfortable working with.

Go through a similar due diligence process when selecting a licensed appraiser.  Keep in mind that the appraiser must have experience in the exact type of materials they are valuing.  A typical home appraiser like the one that determines the value of your home when applying for a loan is not going to cut it.  Appraisers that value salvaged building materials have the background, education, training and professional certifications specifically related to this.   Also, the appraiser must be independent (i.e. not involved in the donation transaction by NOT working with the organization receiving the donations or selecting materials to be donated).

Choose a 501(c)3 organization that is not a foundation that aligns with your values and whose core mission or purpose includes the reuse of the donated materials (so you can receive the highest donation value) and request a copy of Form 990 “Return of Organization Exempt From Income Tax” from the non-profit or Form 1023 “Application for Recognition of Exemption under Section 501(c)3 of the Internal Revenue Code” from the IRS.

 

 

 

 

 

Tags:

Social Networks: Facebook, Twitter, Google Bookmarks, del.icio.us, StumbleUpon, Digg, Reddit, Posterous.

You can follow any follow up comments to this entry through the RSS 2.0 feed.

1 Comment for Turning Your Remodeling Demolition Into A Big Fat Tax Write-Off

  1. Hi Lee,

    Before you do anything, I would strongly recommend that you check with your local municipality to determine whether demolition is your only option. Given the age of your home it may included on a historic preservation list. If so, the municipality may rehabilitation incentives.

    -Monica

Leave a Reply

You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

By submitting a comment here you grant Renovation Planners a perpetual license to reproduce your words and name/web site in attribution. Inappropriate or irrelevant comments will be removed at an admin's discretion.

Sign Up Here