This is a very interesting article on the proposed legislation which would give artists a percentage of any resale sales of their work from the auction market. This would not apply to galleries or private sales, because they are private. Auction houses would pay a tax, which would benefit the artist. In my opinion, both as an artist and appraiser and consultant, I think this would be detrimental to the contemporary art market. Most living artists would most definitely Not benefit from this – in any way. Buyers would be wary of collecting contemporary artists because of possible future penalties or taxes and only the top 1% of artists of all time (whose work regularly sells at auction) would benefit. What do you think?
After the record breaking February 2010 sale of Modern Art at Sotheby’s, art world insiders breathed a sigh of relief. The $104.3 million dollar price paid for the rare Alberto Giacometti’s “Walking Man I” sent shock waves and media attention to the once again record breaking prices for artwork sold at auction. Unlike the private and confidential world of buying artwork through galleries and private dealers, the auction market is a very public and immediate gauge of the pulse and pricing of works of art. The high price has been attributed partly to the rare nature of the work.
Giacometti, one of the most acclaimed sculptors of the last century was notorious for overworking and eventually destroying works of art, and his brother is said to have gone into his studio to “save” the works. His oeuvre is limited and important, and the bidders at this auction knew they were getting a prize. Rarity in the art world is a very misunderstood phenomenon, and the idea of owning such a rare and important part of the canon of art history is a challenge and a unique opportunity available only to handful of collectors.
After a painful economic downturn in 2009, the February 2010 sale was a glimmer of hope to the millions who make their livings in this often-unpredictable world of art. The galleries, private dealers and auction houses see this type of record as a clear and certain sign that the art market is in recovery from the painful economic downturn. Top works were not readily offered at auction, mainly because collectors knew prices were down 30% and many lots failed to sell at all.
The gamble of having an important work of art fail to sell or “Bought In” would mark the work very publicly as undesirable and unsellable for a few years at best. Auction houses stopped guaranteeing sales at high prices due to record losses and debt incurred by high guarantees. The guarantee is an insurance policy for the seller.
After hearing many Gallery owners and dealers talk the past few years about how this has been the slowest period in sales in the last 30 years, I am encouraged that the art market still commands ultra high prices for these “trophy works”. Most insiders readily admit that this does not signal surefire turnaround in the art market, and are encouraged that there are at least a handful of high net worth individuals with the ability and desire to acquire these world-class artworks.
The Art Market parallels the real estate market, the stock market, the fine wines, and exotic cars and antiques market. Appreciable assets will always be in demand and the collectors with the financial capitol and the foresight to buy in at the right time will be the ones to continue to influence the art market economy and ultimately the history of art.
There are many reasons and uses for a Professional Art Appraisal and not everyone needs one. A reputable appraiser will be straightforward with you if you truly do not need an appraisal. Value matters and a Professional Art Appraisal can save you and your family valuable time and money by protecting your assets and accurately valuing and documenting what you have. Many heirs are left with artwork and antiques they know nothing about, and are unsure where to begin and often unknowingly give away the most valuable pieces of a collection, simply because they don’t know what they have.
Knowing where to begin and when you need to have an appraisal will help ensure a seamless transition of your valuables, and protect you in the unfortunate event of a loss. It is important to work with a professional Appraiser, one who is in good standing with one of the three nationally recognized Appraisal organizations and regulated by the Appraisal Foundation of America. For more information on the Appraisal Foundation and Credentialing, please visit http://www.appraisalfoundation.org
- The International Society of Appraisers – ISA
- The Appraisers Association of America – AAA
- The American Society of Appraisers – ASA
- Insurance – Replacement cost
Most Insurance companies will require an appraisal for items valued over $5000, but some as low as $2000 and others more accustomed to fine art coverage like Chubb Insurance, only require an appraisal on items over $50,000. Check with your insurance carrier. All insurance claims will require two things:
a. Proof item existed
b. Value of item at time of loss
2. Charitable Donation
According to IRS Regulation 561, all artwork donations must meet specific criteria:
a. Must be to a non-profit organization whose mission is in alignment with art
b. All items over $5000 must have an accredited art appraisal from a “qualified art appraiser”
3. Estate Federal Tax Liability – 2011 – estate valued over $5,000,000
Each state varies on estate tax rules, so check with your accountant for your state. Some states, such as Oregon collect estate taxes on estates valued over $1,000,000.
4. Equitable Distribution – This is an important part of estate planning and can help eliminate painful and costly family disagreements. An impartial expert determines the Fair Market Value of all of the Artwork and other appreciable assets so the family members are not left to guess or assume value.
b. Family distribution
c. Business or partnership dissolution
5. Re-sale Value
How much can I get for this item, and how do I go about selling it? It is important to know the Real Fair Market Value of an item you are selling. Many people make the mistake of selling a very valuable painting for far less than its current market value, losing thousands of dollars. On the opposite side, people are confused and disappointed when something sells for far less than what they “think” it should be worth. An Appraisal is not a guess, it is a Professional Opinion of Value, based on research, sales comparables and years of experience in the business.
6. Moving/Damage Claim
If the moving company damaged a work of art, is it repairable and how much will that cost? What is the replacement cost if completely damaged?
7. Bankruptcy and Disillusion of a business – what to do with the assets?
Many Banks are now being presented with significant artwork collections seized from bankruptcies and need help evaluating the collections as well as determining if anything is of significant value, and lastly, what to do with these “assets”? Should you sell them all in an auction or should some pieces be privately sold, and if it is an option to keep any of the works or donate them to charitable organizations and receive a tax break.