San Francisco is a city in which the residents love antiques, love art, and love collectibles. People some to us with the most amazing collections of expensive glasses, furnishings, art and paintings – you name it. People love to collect! Many a San Francisco home is furnished with expensive art and collectibles, gathered lovingly by its owner from the various flea markets in San Francisco as well as frequent trips abroad to Europe and/or Asia. As a CPA firm that advises on international tax, we get many clients who have amazing imported collections of collectibles…
Along Comes the Tax Man
And along comes the tax man. When (or if) you sell, you may be saddened to learn that the tax treatment of collectibles is quite different from that of other investment forms. Whereas gains from stocks and bonds are taxed at the lower “capital gains” rate, gains (or losses) from the sale of collectibles impact your taxes at the higher income rates with a cap at 28%. (Of course the exact ramifications will differ based on your personal situation and the true status of your collectible – so reach out to us if you have collectibles, and ask us for tax advise on how, and when, it is most advantageous for you to sell.
Personal Use and the Taxation of Colletibles
Another sticky issue is the concept of “personal use.” Generally if you are using a collectible for “personal use,” such as hanging a picture on a wall, or using a rug as a normal rug, then this nullifies any advantage from losses, yet retains any tax implications from gains. Funny, isn’t it, how the tax code seems to work to Uncle Sam’s favor? Our purpose as San Francisco’s top tax CPA firm, however, is to find every legal way for you to minimize your taxes – so please consult with us on tax strategy – ideally before, during and after you decide to invest in collectibles!