INVESTING IN ART TO SAVE TAX
Did you know that acquring works or objects of art entitles you to a tax reduction? It is possible to decorate your home and to appreciate your heritage while maximizing your tax savings. What are the advantages of investing in art? How can I save taxes by investing in art?
WHY INVEST IN ART TO SAVE TAX ?
Like real estate, art is a wise investment. Investing in art allows you to maximize your tax savings while making a smart investment. The acquisition and restoration of artworks or antique furniture, and the leasing of musical instruments are some of the ways to benefit from tax exemption.
Indeed, pieces of art are not included in the taxable base of Wealth Tax. Investing in artwork also entitles individuals to a tax exemption. The works of art eligible for tax exemption are defined by article 98A of the French General Tax Code.
These include the following objects of art:
- paintings, canvases and photographs of artists;
- antiques and precious furniture;
- sculptures and ancient texts.
All the objects considered as ” collection ” are also taken into account, for instance vintage cars.
WHO CAN INVEST IN ART FOR TAX PURPOSES ?
Investing in works of art can be fiscally advantageous for a company (make a link to art leasing), but also for individuals liable to pay wealth tax (IFI). In fact, while it is an investment that is mainly appreciated by companies, tax exemption of contemporary art is also eligible for individuals.
INVESTING IN ART AS AN INDIVIDUAL
If you are paying wealth tax, the acquisition of artworks will benefit you financially. Artworks are totally tax exempt, and therefore are not required to be declared on your wealth tax return. The capital gains tax on the transfer, by sale or by inheritance, can be reduced. As a matter of fact, works of art can be valued at only 5% of the inherited wealth.
Last but not least, art pieces can be used to settle estate duties. Referred to as payment date, this procedure allows you to settle the tax with a work of art and to gain a significant time extension to meet your tax obligations. This extension is mainly attributed to the fact that this administrative procedure can last up to three years.
WHAT ARE THE CONDITIONS FOR TAX EXEMPTION ON THE PURCHASE OF WORKS OF ART?
In order to benefit from a tax exemption on works of art, certain criteria must be respected :
- Issuing an invoice: the invoice is one of the main prerequisites to benefit from tax exemption through the purchase of works of art. Without an invoice, it will not be possible to gain any tax advantage.
- Original work of a living artist: Only contemporary artworks are taken into account in this tax scheme. The artist must be alive at the time of the purchase of the work.