Unlocking the Value of Your Art Collection
Art collectors have high value inaccessible in their art collections. If they need to access of this value, they do not have to sell their art to create liquidity – Borrow. They can borrow funds and retain possession for their art.
There are big advantages to borrowing – avoiding selling cost, capital gain and taxes. It could be up to 65+ percent. These combination can make it VERY expensive to sell.
What is the alternative to access its liquidity? Borrow.
For example: A collector sells his art for $US 10 million. Assuming selling costs of 20 percent (20 percent of $US 10 million = $2 million) and an original cost of $US 1,000,000 for the art.
By selling during his lifetime, the collector pays 2 levels of tax: capital gains and estate. By borrowing to create liquidity, the collector can keep the art during his lifetime and have his estate benefit from a step-up in tax basis. This enables collectors to pay just one level (estate tax) rather than two. In this example, the collector could borrow as much as $US 5 million (up to half the art’s value) and keep his art. Art collector would be responsible for debt service on the loan, but he would also benefit from any appreciation on his art.
What art collectors do with the proceeds? These are few:
CONTACT US… Collectors interested in arranging financing should contact us for free consultation. We will assist to identify the borrowing need, determine what type of financing makes the most sense, and facilitate the appropriate lender. Please note minimum appraisal report is at USD 5 million.
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