Tax Alert: Big capital gains tax increases are coming. Start your smart tax planning with deconstruction now.
Why Do I Need Green Donation Consultants?
Any taxpayer who makes a non-cash charitable donation to a qualified non-profit is entitled to a tax deduction equal to the Fair Market Value of the items or materials donated. IRS guidelines state that “only a Qualified Appraiser can make a Qualified Appraisal for any donation over $5,000.” Green Donation Consultants specializes in IRS-qualified appraisals that will allow you to receive the fair market tax value for your deconstruction project. We are the largest deconstruction appraisal company in the nation and have completed thousands of appraisals since 2010.
When Do I Need an Appraisal?
Deducting more than $5,000 worth of building components and materials from a deconstruction project requires an appraisal in addition to your IRS form 8283. To qualify for this tax deduction, the materials must be appraised by an IRS qualified appraiser. This appraisal should include a detailed scope of the deconstruction work and a comprehensive list of materials donated. The appraiser will provide a signed 8283 form. Make sure the appraisal package is exhaustive, as the IRS might try to question the donation value. Skipping the appraisal step will almost certainly result in the denial of your tax deduction.
What Is Deconstruction?
Deconstruction is, essentially, construction in reverse. With deconstruction, a crew takes great care to preserve the structural integrity of all parts and materials. This care allows for the salvaging of materials, which can then be reused and recycled. Deconstructing essentially disassembles a building in a way that recovers the maximum amount of materials in a safe, environmentally conscious, and cost-effective manner.
Is Deconstruction More Expensive than Demolition?
Initially, deconstruction does cost more than demolition. That is because the materials must be disassembled carefully by a crew of skilled workers rather than destroyed by demolition machinery. However, once you factor in the tax savings, deconstruction often comes out ahead.
We have provided a chart below of actual deconstruction and demolition costs/tax benefits.
*Assuming 40% tax bracket between Federal and State taxes. The net benefit to the owner is the Actual Cash Benefit minus the cost of deconstruction.
How Does Deconstruction Benefit Builders/Contractors?
As a builder/contractor, you are always looking for ways to increase your ability to be awarded valuable contracts. The materials you are dumping in landfills are actually the solution to making your business more competitive! By choosing deconstruction, builders/contractors can earn LEED points for the project and offer their clients a creative solution to receive substantial tax benefits that could be the make-or-break difference between closing or losing a deal. Eco-sustainability is becoming more and more a deciding factor for clients. Differentiate yourself by becoming an eco-conscious contractor, all while providing significant financial benefits to clients.
What Is the Difference Between Residential and Commercial Deconstruction?
The process between residential and commercial deconstruction is just about the same. There may be differences in the timeline of the deconstruction process itself, but the procedure is identical. The first step is to call Green Donation Consultants. Green Donation Consultants facilitates the whole deconstruction process for clients and associated parties. We can assist you in finding a qualified non-profit that will complete the deconstruction and arrange for the subsequent material donation. We then will use the information gathered by the non-profit to create an appraisal document that you can use to submit to the IRS for your tax benefit. It truly is that simple!
What Is the Difference Between Real Estate Appraisals and Personal Property Appraisals?
It is easy to confuse a real estate appraisal and personal property appraisal, especially in deconstruction, as they ascertain the value of aspects of a property. A real estate appraisal is a document that evaluates a complete building or property to present an overall value. Personal property appraisals in deconstruction break down the property into parts and provide value to each piece of the lumber, steel, furniture, and other items included within the target materials to be donated. Personal property appraisals in deconstruction are a dissection of everything used to create the building and its fair market value once taken apart. They can be extremely complex, hence why it is essential that you use an appraisal firm with extensive knowledge and experience in the deconstruction and personal property appraisal arena.
How Do I Obtain My Tax Benefits?
The IRS has strict rules and regulations when it comes to claiming donations over $5,000. They will require an appraisal document created by a licensed and Qualified Appraiser and a completed IRS Form 8283. Green Donation Consultants can assist you in every step of your donation to ensure you have all the proper paperwork completed to be submitted to the IRS. Failing to fill out the IRS Form 8283 correctly or having a properly structured appraisal document will result in the denial of your tax deduction. It is vital to have professional assistance with calculating your donation’s value and completing the correct forms.
How Long Does the Appraisal Process Take?
Once your house has been deconstructed and the materials donated, we receive a detailed itemized donation receipt listing the items actually received at the non-profit, which we use to conduct our valuation research. Your appraisal and 8283 Tax Form will arrive 4-8 weeks later, depending on the complexity and/or size of the building and materials.