In this period of stock market uncertainty, sluggish property market and increases in taxes, it may be relevant for amateur and investors to diversify its assets in art whatsoever by buying an old painting or modern sculpture or antique furniture.
But what are the advantages, in France, of this type of asset diversification and what are the pitfalls?
No wealth tax
Although the idea of including art in the base of the French wealth tax is mentionned from time to time , today the paintings, antiques, furniture, art and collectibles are exempted from wealth tax and do not have to be declared.
Art allows therefore investment without increasing taxes and even to a decrease because the money spent on the purchase of a painting for example are no longer on your bank accounts.
The most pessimistic should not worry, the risk in the medium term that works of art are integrated into the wealth tax is almost nonexistent.
Capital gain tax
When you sell a work of art, several options are available to the individual in respect of the tax on capital gains.
The non professional selling a work of art is exempt from capital gains tax if:
-he is non-resident.
-the selling price is less than 5,000 euros.
-he owns the work for at least 12 years.
Only one of three clauses is enough to escape!
Again you can look at your situation and opt for a flat 5% of the value of the whole assets , the ancient and modern paintings, antique furniture, sculptures and silverware are considered as simple furniture unless they are kept in a safe.
If this option is to expensive, for example in case of big real estate or equity, you can choose to include them in real terms, an inventory will be drawn up by a commissaire-priseur judiciaire.
Art, before being an investment, must be regarded as a pleasure. In fact, you purchase a painting because it "speaks" to you, first and foremost. It is impossible to predict the value of a contemporary artist in 10 years and apart from a few major artists is all about fashion.
Can you put a price on the emotion that will give you a bronze by Barye placed on the chest of drawers of your living room whenever you enter and will rediscover it a work of art lives with us that is what makes it unique.
Product of asset diversification but also and above all of enjoyment, buying a work of art does not meet the traditional financial criteria. Moreover, the French legislator seems to have understood in the light of the fiscal framework that is particularly favorable designed for fans and collectors.
Cédric Henon, fine art specialist
If you are thinking in investing in art, conatct us for impartial advice.
Feel free to contact our fine art specialists if you want to appraise your works of art. We also assist you in the selling of your works of art : consultancy.