Articles
Taxes You Have to Pay While Buying or Selling Art
by Agro Accounting CPA Accounting for Artists, Freelancers & Creative ComThese days, advisors recommend art as an investment. This is because art has potential to increase in value. However, there are several commercial aspects that one needs to consider before deciding to invest in art. One example is the absence of a clear public market for art. Despite this, if you still decide to invest in art, how will you be taxed for investing in such assets? No matter where you put your money, you still have to consider tax preparation for artists.
The definition of a capital asset changed on April 1, 2007. Since the change, art is subject to the capital gains tax. Before this, art forms like sculptures and paintings were not regarded as a capital asset.
As of now, if you happen to hold any form of art for three years or more, the gains that you make will be considered long-term capital gains. The gains can be calculated by indexing the cost and applying the cost inflation index, and taxes at 20%.
Let us look at the list of taxes that you need to look into before investing in art, whether you are a buyer or a seller.
1. Use tax
The use tax is a sales tax on purchases. This tax is for purchases made outside of one's home state. In better words, you pay this tax when the art is bought and sent to a different state immediately, such as if you buy art in California and send it to Florida. This tax varies from state to state. There are times when collectors use this rule to save money on taxes. For instance, if you buy a piece of art from one state and ship it to another, in order to lower the use tax rate.
2. Sales tax
By now, you should know that tax preparation for artists comes with variety. When it comes to sales tax, it is to be paid in the country or state where the sale takes place. For this matter, art is sold by the auction house, gallery, or dealer. In the States, such taxes vary from state to state.
3. Resale tax
If you reside in the
United States, you don't have to worry about this tax. Unfortunately though, if
you are in the United Kingdom, you will have to pay these taxes.
People need to look into a few taxes before purchasing or selling art. Otherwise, hiring a professional for these matters is the best thing that you can do to keep up!
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About Agro Accounting CPA 
Accounting for Artists, Freelancers & Creative Com
18 connections, 0 recommendations, 74 honor points.Joined APSense since, May 21st, 2020, From Brooklyn, United States.
Created on Mar 15th 2022 06:58. Viewed 220 times.
