Must Read Before Renovations!

[Julio Gonzalez]

Many of us real estate investors at one point or another in our REI careers will flip a house or perform a demo on a property. With demos and gutting properties comes a lot of waste. But did you know that you can actually get a tax deduction for donating items rather than just tossing them out? As a property owner, you could claim everything that you donate from the house to a 501(c)3 charity at its fair market value.

In a Washington Post article, they determined that between 85 and 90 percent of a house is recyclable or can be repurposed by deconstructing the property. While performing a deconstruction of the property rather than a demolition in which the property is gutted is more expensive, the tax deductions from the donation write-offs can well exceed the cost of the deconstruction. The article also talked about a homeowner that chose to deconstruct her property for $23,000 but received a tax deduction of $130,000 from the materials that she donated. That’s a huge increase in your cash flow!

So what items can you donate? Note the items must be undamaged.

• Cabinets
• Cabinet knobs and door handles
• Lumber
• Appliances (in working condition): washing machine, stove, dishwasher, refrigerator
• Windows and Doors
• Bathtubs, sinks and toilets
• Light fixtures
• Wood flooring and tiles

So where can you donate these items?

• The Loading Dock
• Habitat for Humanity ReStore
• Community Forklift
• Recycled Building Network

By donating materials and items instead of throwing them away, you get to help the community, help the environment, AND get a tax deduction! What’s better than that?!

If you’ve donated items, what have you donated and where did you take the donations? Tell me about your experience!