RSAS / Why Contemporary Art
Why Own Contemporary Art
The rewards of collecting living artists, with the costs and risks set out in full.
There are good reasons to own art, and some of them are financial. There are also costs and risks that the people selling art seldom mention. Collectors who understand both tend to be happier with what they buy, and far less likely to be disappointed when the time comes to sell.
What Draws Collectors
Something real
A painting or sculpture is an object you live with and enjoy every day. Its worth does not rest on a company's management or a counterparty's promise. For many owners, that is the whole point.
Portable
Unlike property, a well-documented work by an artist with an international following can be offered to buyers in several countries. Many contemporary artists, though, sell mostly in one region, and our research will show you where an artist's buyers actually are.
Its own rhythm
Academic studies and industry indices have generally found that art prices bear little relation to day-to-day movements in equity markets. That does not mean art cannot fall in value. It can, and in a broad downturn buyers often become scarce just when some owners need to sell.
A career in progress
With a living artist, you watch the story unfold: new bodies of work, exhibitions, museum acquisitions. Where an artist's institutional standing grows, collector demand often follows, though rarely at the pace dealers like to suggest.
The Costs and Risks Most Sellers Leave Out
Transaction costs
Auction houses charge sellers a commission and buyers a premium, and private sales carry fees of their own. Together they can absorb much of any gain, which is why short holding periods rarely make sense.
Holding costs
Art produces no income. Insurance, storage, framing and conservation all cost money.
Liquidity
There is no guarantee that a work can be sold quickly, or at all, at the price you hope for. Auction calendars are seasonal, and consignment can take months.
Attribution and title
A work with weak paperwork can be very hard to sell, whatever it cost.
Taste and fashion
Markets for individual artists can cool sharply, and some never recover.
Flattering headlines
Record auction prices describe a handful of exceptional works. They say very little about what an artist's typical work sells for.
Tax, in Outline
In the UK, works of art are generally treated as chattels. There is no annual tax on owning art and no stamp duty on buying it, but capital gains tax may be due when a work is sold or given away, subject to the chattels rules and the annual exemption in force at the time. VAT and Artist's Resale Right may apply to a purchase, and inheritance tax can apply on death. The position depends on your circumstances and residence, and the rules change. Please take advice from a qualified tax adviser.
Market Context
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