As the art market continues growing, with more people buying at ever-higher prices, it is becoming increasingly difficult for newcomers and even seasoned collectors to navigate. On top of the growing numbers of artists and galleries, art-collecting strategies are becoming more complex, particularly if investment is the motivation. And as one of the last big businesses still unregulated, it’s full of temptation.
But as this week’s Barron’s Penta article on freeports illustrates, regulators are watching and beginning to take action. In Stashing Your Art in a Tax Haven Can Be Dicey, author Stacy Perman describes the current situation. Freeports are storage facilities in various parts of the world where art buyers can park their collections, which are considered to be in transit while there, and not pay taxes. Perman astutely describes a freeport as a “maximum-security safety-deposit box with tax benefits.” She consulted with me in researching her piece, and I strongly agree with her conclusion that storing in freeports is not worth the risk. The article is a quick read that illuminates an interesting but tricky issue surrounding your investments in today’s art market, and I encourage you to follow-up with me if you have any questions after reading it.
10/26/15