Tuesday, October 26, 2021
The U.S. $3.5 trillion budget reconciliation bill before the U.S. Congress could greatly impact wealthy individuals who collect art. That being said, art collectors should keep their eye on the bill as changes within the legislation "could have big consequences for how they manage their collections."
According to Monica Heslington, head of the art and collectibles advisory team at Goldman Sachs Family Office, those who own art and collectibles do not typically view their treasures in the same way as investments in stocks and bonds, but want to "display their paintings, and keep driving their sports cars. . ." Heslington added that "it's a lot easier to get clients to plan with financial assets than it is with art and items that are important to them. . ."
Currently, sales of art and collectibles are subject to a 28% long-term federal capital gains tax rate.
Typically, the supply of art on the secondary market is driven by death, divorce, and bankruptcy, but people also sell art when they want to upgrade their collection or when their taste in art changes.
Despite whatever reasons there are to buy, sell, or collect art, it is important for wealthy collectors to pay close attention to possible changes in legislation, as failing to do so could result in dire consequences.
See Abby Schultz, Future Returns: How Proposed Tax Changes Could Affect Art Collectors, Barrons, October 5, 2021.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.