Investing in art is a great way to boost your portfolio. Canada Revenue treats art in much the same way it treats other investments. In most cases, half of the gains on the sale of art are taxed just like any other capital gains, but there are further incentives for owners who donate their works to charity. Investing in art for the first time can be an intimidating experience. Huntington T. Block, underwriter of Fine Art Insurance in the United States, has some tips.
1. Consult experts:
A knowledgeable conservator, an art advisor, and an insurance broker. A conservator will tell you if the piece is in good condition and what kind of restoration may be needed. An experienced art advisor will help you research the art and negotiate terms. An insurance broker can guide you on what type of policy to purchase.
2. Ensure the work is insured before it arrives:
Have documentation of purchase and call your insurance broker to get a fine art policy. Review the agreement with your broker to see who is responsible for the item in transit.
3. Know what your insurance covers:
With a fine art insurance policy, it is important to review a policy’s exclusions.
4. Online purchases or art made of unusual materials:
Shop smart, request condition reports and photos of the art. Buying a piece of art made of an unusual medium? Understand the challenges of the materials and how insurance may respond.
5. Understand the “valuation clause”:
An amount agreed to by buyer and seller is a valuation clause in the event of a loss. It is based on the purchase price of the artwork or based on the current market value.