When The ReUse People (TRP) launched back in 1993, it was with the naïve assumption that the practice of building-materials reuse would come naturally to most people. After all, Americans had been buying used cars for over 100 years. Why not doors and windows? What we didn’t initially consider was the importance of supply. It’s much easier and cheaper to throw away used building materials than it is used cars, so how were we going to build inventory?
After years of struggling for mere existence, it finally became clear that the ease of discarding used building materials had to be matched by salvage incentives strong enough to justify the time and energy required to separate reusable from non-reusable materials, transport them to publicly accessible locations, arrange the materials for consumer viewing, and assign attractive prices that would provide a modest return on all that labor-intensive investment. What flipped the economics was the tax deduction. The ability of a qualified nonprofit to issue receipts for tax-deductible donations of materials gave homeowners the incentive they (and we) were looking for.
When, in its third year, TRP began providing deconstruction services and salvaging much larger quantities of materials, the services of personal property appraisers became mandatory. This was necessitated by the IRS requirement that donors engage independent appraisers when donation values exceed $5,000. The appraised value of received donations, when deducted from the building owner’s taxes, tended to offset the financial burden of deconstruction, making deconstruction more financially and environmentally attractive. In many cases deconstruction proved even less expensive than demolition.
There are two types of appraisers: real estate appraisers and personal property appraisers. TRP requires the use of personal property appraisers, because when the donated materials are removed from the building, they become personal, not real, property. Personal property appraisers are also required when the entire structure is disconnected from the ground and donated to another party (as in house-moving), leaving just the real estate.
All 50 states require real estate appraisers to be licensed, while licensing is not required for personal property appraisers. For tax-deductible donation purposes, the IRS requires that personal property appraisers be “qualified” (ref: Internal Revenue Code §170(f)(11) and IRC Regulation §1.170A-16(d)(1)(ii) and (e)(1)(ii)). Qualifications include education, experience, not being a party to the transaction or related to the transacting parties, and knowledge relevant to the type of property being donated (an antique furniture specialist is not qualified to appraise used building materials).
If deconstruction and the donation of used building materials are on your agenda, here are some tips for finding a qualified appraiser:
• Ask the donee (receiving nonprofit organization) for the names of appraisers whose clients have donated to them.
• Do not call the appraiser. Instead, review their website and, if used building materials are not listed as a specialty, keep looking.
• Always get an estimate or range of value in advance from appraisers.
• Ask for a copy of a recent appraisal. Only the donor’s name, mailing and property address should be redacted.
• Ask the appraiser for a list of recent clients who donated used building materials and the qualified nonprofit organizations that received the materials.
If you need an IRS qualified appraiser of used building materials, TRP can help. We know several who are qualified. We also know several who are not.