Source: Groco
Photo / Image Source: Abstract Watercolor M3 - Shidonna Raven Fine Art & Giclees. Copyright. All Rights Reserved.
At the same time, anyone who tries to profit from his or her collection also knows how much the IRS likes to get its fair share after the sale. However, there is a loophole that can be very valuable to those who buy and sell valuable artwork.
They are known as 1031 exchanges and this is how they work. Many wealthy art collectors can, and do, save millions in taxes by essentially rolling over their profits from selling their collection pieces into buying more art. As the price of high-end artwork continues to rise, many collectors are taking advantage of this opportunity. Instead of paying millions of taxes on their proceeds, collectors turn around and put the money towards adding to their collection.
While some lawmakers frown on the practice, it is perfectly legal and allows art investors to defer taxes on their income from selling art. Many art collectors have found it to be an excellent way to extend the value of their art holdings, while at the same time avoiding letting millions get sucked away by the government.
Which space are you collecting for business or home? Is it investment? How can you save on your taxes with your purchase? Which Shidonna Raven Fine Art or Giclee will you choose?
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