Eco-Salvage FAQ
FREQUENTLY ASKED QUESTIONS
Q. How is it possible to make a separate donation of the structure or its enhancements apart from the underlying land?
A. By employing a non-cash charitable deduction, an IRS qualified real estate appraisal, and partnering with a certified non-profit organization, the donor can facilitate the donation of the structural enhancements in accordance with the IRS regulations governing this specific type of contribution. It’s important to note that Harvest is unique in that not many non-profits possess the qualifications to facilitate this particular form of donation and provide the necessary documentation to the IRS, enabling you to claim the deduction.
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Q. Is it legal to remove a house from its property? What occurs to the value of the property when this happens?
A. Yes, it is legal to relocate the structural improvements of a property. People frequently transport entire structures, or alternatively, demolish older ones and offer just the structural enhancements for the use of a non-profit. To date, no state or municipality has required the filing of a partial interest release for this donation to HARVEST EcoSalvage.
To verify this, simply examine your tax bill. It will distinctly list separate values for the land and the improvements. Additionally, your insurance policy often only covers the improvements. Insurance policies typically classify land as a permanent element that is not subject to coverage or destruction. (While the requirement for documenting the transfer of all Real Property, including donated enhancements, may be specific to the State of Maryland, there are no prevalent restrictions against making such a donation elsewhere.)
*NOTE: An in-place real estate appraisal values a property in its intact state with all improvements attached and functioning within the structure.
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Q. Is this charitable non-cash donation likely to result in an audit?
A. We strongly recommend that all donors consult with their tax professional before donating. During our 25+ years of experience in the Phoenix metro area, we’ve issued these types of deductions and have never encountered any complaints or challenges from the IRS regarding the manner in which we process these deductions or their valuation.
Additionally, we have not received any communication from donors necessitating our assistance in defending an audit. According to tax professionals, donations exceeding $300,000 often trigger a review by an IRS Supervisor, but because our operational approach has aligned with the IRS guidelines, our record remains untarnished. We take pride in the fact that the IRS has never rejected any of the donations we’ve facilitated.
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Q. In the event that my deduction is contested, how will HARVEST support me?
A. As outlined in our IRS-approved business plan, we are under an obligation to maintain comprehensive inventory records, photographs, and meticulous material tracking. This includes retaining receipts from other non-profits to which we donate materials, as well as load tickets from recycling facilities. We retain all of these records for a minimum of seven years.
Additionally, the IRS requires us to keep a portion of each project in storage for at least three years. It’s important to note that the IRS holds both the Executive Director of HARVEST Eco-Salvage and the IRS Qualified Appraiser accountable. Both may face significant fines for any misrepresentation of a donation.
The documentation for each donation is comprehensive and meets IRS requirements. If requested by the IRS, we will provide them with the evidence that the deductions we issue meet all required criteria.
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Q. How is a real estate appraisal different from a personal property appraisal?
A. Personal Property Appraisals: This is the type of valuation method known to most people when they donate items to a thrift store or charity. With this type of valuation each item is assessed on its own, allowing for quality and condition and is based upon what the donee can realize in value, what it can sell for, in the thrift store, usually about ten cents on the dollar.
A personal property valuation must be defended by the donor if challenged by the IRS. A thrift store cannot issue an IRS form #8283 if they do not keep inventory or track the sales price of each item donated to them and link it back to the total value of the donation. When all items are sold and the value received by the donee is less than the donation they issued, an IRS form #8282 must be issued revoking some value of the donation. It may take several years for the entire donation to be liquidated and the item value, as priced in the thrift store, may have changed (been marked down, damaged or discarded by the donee. The issuance of an IRS form #8283 amending the value of the donation could be an issue for the donor.
Real Estate Appraisals: This type of appraisal is based upon an intact (or in-place) structure and considers the Fair Market Value (FMV) of the land and the value of the improvements separately, then combines the two to create a total value of the real estate. Real estate is two things combined, land plus improvements. If you have a bare lot it is sold and marketed as land. If you have a store or house on leased land it is valued and marketed as real estate improvements. Looking at a property tax statement you will see the clear definition of the value of each. Land and improvements are taxed and insured separately. You have a title insurance policy for the condition of the land (encroachments, easements, dimensions, etc.), and improvements are insured for fire, flood, vandalism, etc. A Real Estate Appraisal can be issued for either land or improvements separately and the appraiser is responsible for defending the appraised valuation.
REGARDLESS of the type of donation, the first rule of any donation is that “the donor can not dictate the use of the donation.” The donor may select a donee due to their stated mission but can put no demands or requirements on that donation. Once the donation is made the donor has no control or responsibility for what is done with it.
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Q. If I make a donation to your program, can I stipulate that, for example, we donate kitchen cabinets and appliances to my church, school, or friend?
A. No, one of the IRS criteria for this kind of donation is that the donor cannot specify a recipient for any portion of their donation. Furthermore, you must convey the materials to us as they were appraised. You cannot participate in donating materials or removing the items appraised from the house.
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Q. What materials can Harvest recycle from an old building?
A. In an old building, we cannot only reuse or recycle the functional appliances, cabinets, plumbing fixtures, doors, windows, mechanical equipment, and other materials, we can also recycle the entire structure itself. This comprehensive approach sets HARVEST Eco-Salvage apart from other recycling and deconstruction companies. Our unique program covers the entire structure, from finished materials to structural elements. On average, we divert over 90% of a house’s mass from landfills, and we reintroduce all of these materials into the community. This includes recyclable items such as concrete, asphalt, metals, and lumber.
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Q. Do you run a thrift store for used building materials like some other non-profits in town?
A. No, we do not operate a thrift store. Instead, we channel the materials we’ve salvaged to our nonprofit housing partners. Our primary goal is to swiftly reintegrate these materials into our community. By doing so, we empower our partners to directly address the housing needs of our community, enabling them to excel in their mission of helping those in need. Furthermore, our donations alleviate the time and financial burdens associated with procuring materials, thereby extending the reach of their budgets. Harvest isn’t in the business of selling used building materials. We are dedicated to keeping usable and recyclable building materials out of our landfills.
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Q. Does the donation cost follow an average, a cost per square foot, or a percentage of the appraised value?
A. No, none of the above. Each project is unique and requires a customized assessment by HARVEST. We conduct on-site evaluations and create a budget tailored to the specific project’s requirements. For instance, two identical floor plans side by side may have different valuations due to upgrades, such as fine woodworking built-ins and hardwood floors in one house. While the exterior appearance and structural values may be the same, the house with these enhancements would require more skilled labor and time to glean.
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Q. How much time will your program add to the demolition process?
A. The time needed to salvage the readily reusable materials typically averages 3–6 days for a 2,000 square foot home, while the structural materials portion of the same size home salvage adds, on average, 2–3 days to the structural demolition process. However, the exact duration depends on the quality and quantity of materials in each specific project.
Your General Contractor manages the structural demolition. They are responsible for all structural work on your site. We work in coordination with the General Contractor to carry out the “selective demolition” our program requires. For our selective demolition process, we separate reusable materials on site, delivering them to other non-profit partners where these items are put back into the community to be used where needed. We then take each category of recyclable materials to the appropriate recycling facility. Load tickets are provided to Harvest for inclusion in the donor’s file.
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Q. I want to do an extensive renovation of my home, can the HARVEST program work with me?
A. Yes, the short answer is that the appraisal will take into account the larger scope of work for your project. However, it’s important to note that the renovation needs to be extensive to justify the costs of the program.
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Q. What is your approach to managing neighborhood resistance and the sentimental connections to the old structure?
A. Urban areas naturally evolve through redevelopment, contributing to increased property values and municipal revenue. This is an inevitable process, but it doesn’t have to be mean or devoid of compassion. Our teams are acutely attuned to the concerns of neighboring residents and strive to approach buildings slated for reuse or redevelopment with utmost respect. We understand that these structures have held significance in people’s lives, serving as homes where families create cherished memories. We acknowledge the emotional impact on the surrounding community and act accordingly.
Our construction sites maintain a pristine appearance, with materials securely bundled and wrapped for transportation, and daily containment of all waste. We prioritize cleanliness, orderliness, and respect to minimize disruptions to the peace of the neighborhood. Disorderly and unclean sites not only reflect poorly on the quality of work, but can also create safety hazards. A clean and well-organized site ensures a safer work environment with reduced risks of accidents or concealed dangers.
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Q. This program is new to me; how do you find people willing to donate?
A. Through word of mouth, much like the way Linda Eales, the founder of HARVEST Eco-Salvage, built relationships with clients during her previous career as a luxury home architect and builder. Linda has established connections with some of the most reputable builders and real estate professionals in the region.
Donors often share their positive experiences with friends, who, in turn, spread the word. Furthermore, tax professionals recommend the program to their clients, and neighbors inform one another. With several donors returning to participate again, the network of support continues to grow.
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Q. Is it possible for me to bring my children to the site and assist with breaking down walls using a sledgehammer?
A. No, our process is not like what you see on HGTV. It’s not about demolition but rather deconstruction. Our work often involves live water and power sources, as well as potential hazards like holes in the floor. We don’t use sledgehammers; our team works carefully with flashlights and pry bars. Moreover, allowing others, especially children, to participate poses significant safety risks and is not permitted. Our insurance coverage would not allow it.
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Q. Can I volunteer to help you deconstruct?
A. For reasons similar to the above, we can’t let donors help on the job site. Our team consists of full-time professionals with verified construction experience, who are fully prepared to execute the full process.
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Q. Who has a need for recycled building materials?
A. In addition to thrifty DIY enthusiasts and handymen, there are several groups and communities with a demand for the materials we salvage. Our social service partners work to enhance the living conditions of low-income individuals, while the arts and theater community often uses these materials for creative projects.