A Demolition Discount?

 

Homebuyers and renovators are starting a new trend. Instead of demolishing a home and completely destroying it, they are "deconstructing," and donating the used materials…

"More home buyers who want to tear down an existing home and rebuild on the same lot are doing so without wrecking balls and bulldozers. "Deconstruction" is a growing trend in the West Coast housing market. WSJ's Monika Vosough reports.

In this process, a crew carefully dismantles an older property by hand instead of using bulldozers. The process costs more than a straightforward demolition—one family, the Weisses of California, paid more than $20,000 for the disassembly, roughly double what they would have paid for a wrecking crew. But they were able to donate home materials such as lumber, roof tiles and even lamps to nonprofits for reuse.

The donated materials were appraised by an appraisal-and-consulting firm at $159,000, which the Weisses can apply to their tax bill to receive a deduction. Based on the Weisses' tax bracket, Ms. Weiss estimates that will ultimately work out to a savings of around $66,000, or more than three times the cost of the deconstruction. Spurring the movement is growing awareness of "green" building, as well as more laws restricting the dumping of building materials into landfills. It doesn't hurt that there's typically a big fat tax break attached, either.

This current surge is centered in wealthy enclaves along the West Coast, in areas such as Silicon Valley and cities including San Diego, Los Angeles, Portland, Ore., and Seattle. Many of those locales share a distinctive set of features: populations with eco-friendly mind-sets; an older housing stock ripe for tear downs; strict environmental laws and moneyed residents eager for a substantial tax credit.

Five or six years ago, it was a novel thing. Now it has reached "more of a critical mass," with the value of tax deductions from the process routinely starting at $40,000 to $50,000 and going north of $100,000, he says. Some people who do deconstructions have never lived in the home they bought, so sometimes brand-new doors, windows and kitchen cabinets also get recycled. In one house, there was $100,000 of just lighting fixtures.

After a home is disassembled, the building materials typically go to nonprofit building centers, which aggregate the goods and then sell them to nonprofits and directly to the public. At least several West Coast metropolitan areas, including the San Francisco Bay area and Portland, have such centers, like the ReUse People in Oakland, Calif. and the Rebuilding Center in Portland. Owners or their contractors bring the materials to the centers, which confirm receipt. Ms. Weiss says that she followed the trail of what happened to the roof barrel tiles from her home and found that they eventually were procured by the Habitat for Humanity East Bay/Silicon Valley in Oakland."

-A version of this article appeared December 21, 2012, on page M1 in the U.S. edition of The Wall Street Journal, with the headline: The Demolition Discount.

Posted on December 26, 2012 at 11:22 pm
MJ Steen | Category: Uncategorized | Tagged , , , , , , , , , ,

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