Deconstruction is an environmentally friendly alternative to demolition and on the KHouse Modern project, the existing house on site is currently going through the process of being taken apart piece by piece. Despite the fact that we are going to seek LEED for Homes certification for our project (where deconstruction is preferable to demolition), there are benefits to every residential home owner who is planning on building a new house on a site where a house currently exists.
To compare the difference between demolition versus deconstruction is pretty simple:
Demolition = shut down/ disconnect utilities, smash everything down, haul off to the dump
Deconstruction = Tcrews carefully deconstruct the building to salvage as many of the reusable materials as possible, diverting them from local landfills. Salvaged items typically include doors, windows, cabinets, lighting and plumbing fixtures, framing lumber, roofing materials, and flooring.
So what are the advantages to deconstruction? For most people, it starts and ends with the bottom line – the $$$. On average, the cost to demolish a house is about 1/2 as much as it is to deconstruction a house (i.e. $15,000 for demolition vs. $30,000 for deconstruction.) Let me guess what you’re thinking – “why would I pay twice as much to deconstruct my house rather than just demolish it?!?”
Two words – Tax. Deduction.
It should come as no surprise that the value of your “used building material” donation could be substantial. I would even go so far as to suggest that it is typically large enough to pay for the costs of deconstruction. In a worst case scenario – from a cash out-of-pocket standpoint – being able to donate building materials from your house which could offset the cost of your demolition (regardless of how small it may be) makes deconstruction something to consider. Beyond the worst case scenario, your material donation could greatly exceed the costs of your deconstruction, making the process a positive cash flow solution.
Of course, you probably want cost benefit specifics but guess what? I’m not going to provide them because there are literally a million moving parts on this process. The value of your material donations will vary depending on your location, the age and condition of the your home and it’s salvaged materials, the type of exterior cladding, interior wall finish, trim work, countertops, landfill rates, etc. Despite these variables, and partnering with the right deconstruction vendor, the cost benefits almost always favor deconstruction over demolition.
There is a process to doing deconstruction that adds some time to the overall project schedule. Where demolition would take only a few days, deconstruction takes quite a bit longer – about 4 times as long. In addition to the on site work, there is plenty of work to be done and tasks to be scheduled and arranged ahead of time.
Any in-kind donation, valued at $500 or greater, requires the donor, or the donor’s professional tax preparer, to complete IRS Form 8283. To actually determine the value of a donation, you need to know the following:
- If the value of the donation is $500 or greater, Form 8283 requires the preparation of an appraisal report and the signature of an independent, third-party appraiser.
- Appraisers must be IRS qualified, and the appraisal must be conducted under the standards of the Appraisal Foundation, which requires that appraisers be entirely independent.
- The materials valued by the appraiser must be listed on a donation form with specific and detailed information sufficient to enable the IRS to make its own assessment as to the types of materials donated and their condition.
- The materials list must only be prepared by the donee (recipient organization) in collaboration and agreement with the donor.
Next, you will need to retain the services of a Licensed Independent Appraiser – and not all licensed appraisers are qualified to appraise used building materials. This appraiser needs to be an IRS qualified appraiser, one with the background, education, training and professional certifications in the exact type of materials they are being asked to value. Finally, your appraisers – in order to maintain independence – may not participate in the selection of materials that will ultimately be qualified for donation as this would involve them in the donation transaction and pose a potential conflict of interest when the quantity of donated materials might be inflated simply to increase the cost of the appraisal.
Whew! If this process seems overly complicated don’t worry – most of the heavy lifting can be done by others once you decide to pursue this path. I don’t have a list of names to give you here and until this deconstruction process is completed on the KHouse Modern, I’d prefer to keep our vendor’s name to myself. We have a really savvy client on this project and this process was initiated by him – I have been playing catch-up from the beginning.
If you have any thoughts, or have gone through this process yourself, I would love for you to share them in the comment section below. I will continue my own research on the process and as I discover resources worth sharing, I will come back and amend this article.