The construction industry is undergoing a fundamental transformation—one driven not only by climate urgency but by market logic. According to McKinsey & Company’s recent article, “How Circularity Can Make the Built Environment More Sustainable,” the adoption of circular practices in construction could reduce up to 75 percent of embodied carbon emissions by 2050 and create as much as $360 billion in net value gains across key building materials. These gains are not speculative—they are grounded in realistic shifts in material sourcing, reuse, and system redesign.
Cement, steel, aluminum, plastics, flat glass, and gypsum wallboard all offer quantifiable opportunities to capture financial and environmental value when kept within productive use cycles. For example, increased recycling of cement aggregates and use of low-carbon alternatives could yield $122 billion in net value by 2050. Similarly, the decarbonization of steel and enhanced reuse of aluminum and plastics could result in additional combined gains of more than $200 billion. These are not abstract figures—they represent material-level efficiencies that can be captured through strategic planning, modernized workflows, and policy alignment.
Tax Deductions for Donating Building Materials
At The Green Mission Inc., we have been building this future for more than five years since opening in 2019. Our team currently prepares approximately 1,000 IRS-compliant deconstruction appraisals annually, the majority of which serve residential property owners. In these cases, salvaged building materials—cabinetry, flooring, fixtures, appliances, and more—are donated to qualified nonprofit organizations. The donors receive non-cash charitable deductions, which they report on Schedule A of their Form 1040. This model has proven highly effective among individual taxpayers, where the tax deduction often serves as the primary motivator to choose deconstruction over demolition.
However, this framework has critical limitations. The charitable deduction is only beneficial to taxpayers who itemize deductions, and its value is directly tied to a donor’s effective or average tax rate. For example, a donor with a 32 percent effective federal tax rate will reduce their tax liability by thirty-two cents for every dollar donated. In contrast, a taxpayer with a 9 percent effective tax rate who does not already itemize must first surpass the standard deduction threshold before receiving any benefit, and even then, the savings may amount to only nine cents on the dollar.
Additional complexity arises at the state level. Some states allow deductions for non-cash charitable contributions, further increasing the benefit, while others do not. Please see our website for an article delineating which states do and do not allow non-cash donations here: State Non-Cash Charitable Contributions. Furthermore, current federal legislation under consideration that would repeal the State and Local Tax (SALT) cap could significantly improve the value of deductions for high-income individuals, making deconstruction more appealing for those in higher tax brackets but completely passing over middle-class homeowners who cannot afford the extra cost of deconstruction over demolition and without a tax deduction to bridge the difference. The secondary market is losing significant building materials solely because the tax deduction numbers do not work out for middle-to-lower income taxpayers.
In addition to our residential work, The Green Mission Inc. also conducts commercial deconstruction appraisals and is actively expanding the corporate side of our operations. However, the financial benefits of charitable contributions are often much more limited on business tax returns. Corporate taxpayers deduct these contributions on Form 1120 and pass-through entities on the 1040 Schedule A, but when the donated materials have already been fully or substantially depreciated—as is often the case—the allowable deduction is reduced by the remaining adjusted basis in the property. Another critical wrinkle: the improvement basis must be reduced dollar-for-dollar, and the amount is ultimately recaptured in the gain on the sale of the property, effectively neutralizing the benefit. As a result, the donation becomes a tax-neutral transaction—a wash—and the charitable incentive loses its economic value.
The deduction is only allowable for capital gain property and not ordinary income property so house flippers need not apply as the IRS considers them “Dealers” rather than “Investors.” This is yet another huge bleed of usable building materials going straight to the landfill.
Beyond the Tax Deduction: Build the Market, Expand Labor Force
This is why The Green Mission Inc. has expanded our mission beyond the limits of the charitable deduction model. We are investing in consulting with other industry leaders in infrastructure and workforce development to support the emergence of a viable and profitable secondary market for used building materials. By expanding the labor force capable of performing skilled deconstruction and salvage, improving logistics for material handling and redistribution, and building out networks that connect donors, contractors, and resale platforms, we are laying the foundation for a circular economy that works—financially and operationally.
Additionally, by relying upon the true industry leaders in efficient and effective deconstruction techniques and their expansion of training capacity, the labor market for these services can grow, resulting in more high-paying jobs not likely to be outsourced by AI anytime soon.
At present, most used building materials trade at just 20 to 25 percent of their original retail value. This undervaluation is largely due to inconsistent supply, limited accessibility, and uncertainty surrounding product quality. What builder wants to wait 6 months to order 35 non-fungible doors from 10 different nonprofits around the country, pay for shipping and hope the owner does not mind the non-matching doors?
However, as we increase both the quantity and consistency of salvaged goods entering the market, we expect to see supply stabilize, demand grow, and prices rise. Once the market reaches a point where supply and demand intersect reliably, the secondary market will become not only viable but profitable—especially as builders, designers, and owners begin to anticipate the availability of reclaimed materials as part of their core procurement strategy.
Deconstruction: Expanding the Carrots through Market Growth
Circularity in the built environment cannot rely solely on tax policy carrots or regulatory mandate sticks. Many jurisdictions have introduced deconstruction ordinances and landfill diversion rules, but developers often factor these financial penalties into their project budgets and proceed without meaningful salvaging. Real change requires market-based incentives—profitable systems that drive voluntary adoption at scale. That is the future we are building at The Green Mission Inc.
Sustainability is not just about what is avoided, but about what is recovered, reused, and reinvested. The opportunity to redefine material value is here—and it is not only good for the planet, but good for business.
Jessica I. Marschall, CPA, is the CEO of The Green Mission Inc., an IRS Qualified Appraiser, and a business valuator with 25 years of experience in tax compliance, valuation strategy, and sustainability consulting for individuals, corporations, and nonprofits.
