Art collecting is a pastime that is regularly engaged in by the well-to-do and others who appreciate the best in human culture. Do you love fine art but feel intimidated by your lack of knowledge? Would you like to know more and become an art aficionado? Are your clients asking for help with managing their art collections–including buying it, donating it, or passing it on to heirs? The opportunity is yours if you can understand how to collect and protect your artwork and to advise clients how to do so. To begin, let’s set some basic rules for art collecting:
Art is for enjoyment Studying art in school is okay, but observing it at museums and galleries is the only way to appreciate it.
Educate yourself Read newsletters or trade magazines about art, such as ARTnews, Art on Paper, Art in America, Art & Antiques, and Smithsonian, and attend exhibits. By showing enthusiasm for the art at those exhibits, you will attract the interest of more experienced and knowledgeable people who will share their expertise with you. By becoming saturated in original art, you will gain expertise and confidence in understanding and appreciating the works’ different styles and materials.
Don’t count on art being a good investment This is a corollary to the first rule. Maybe in 25 years a work will increase in value 500 times, but that’s unlikely. However, many people do acquire art assets during their lifetime. A majority of wealthy Americans purchase art and attend antique auctions as a lifestyle activity. Eventually, these individuals will need professional expertise regarding valuation, authentication, disposition, protection, transfer, insurance, conservation, transportation, or conversion of art assets to cash.
Collect the work of living artists By focusing on collecting the works of living artists, you will be assured of buying an authentic piece of work and will have great satisfaction in supporting a favorite artist.
Beware of fakes and reworked pieces Be wary of unscrupulous dealers who delight in scamming artists and collectors. Never be demoralized by your lack of knowledge but always be willing to educate yourself about various types of art. Advise your clients to enroll in art history courses and become familiar with local museums. Consult with academics, curators, or art appraisers who can offer advice and referrals regarding a particular need. The International Association for Professional Art Advisors is a not-for-profit association comprising many of these art-service professionals who can provide technical assistance.
Beware of auction houses as a source of art Bids can be inflated and you or your client can accidentally become the owner of an expensive item that you never wanted and can’t get out of buying.
Since collecting art is considered a hobby and the collector does not purchase art for resale, he therefore pays state and local sales taxes. It is important that the bill of sale summarizes all the details of the piece of art, including the artist, title, description, date, vendor and price. It is important to maintain all records for reference in the event of a future donation to charity or capital gain sale. When a collector donates art to a museum, the fair market value of the deduction is identified as a charitable donation and Federal Form 8283–Noncash Charitable Contributions–is filed with her personal tax return. A common mistake is to accept a gift from the artist who created the work. In this instance, the valuation is limited to the artist’s cost of materials and there is no consideration on the holding period or the appreciated value of the work. It is best to advise your client to pay for any artwork by check and obtain the dated sales invoice for all purchases.
If your client donates an item worth more than $5,000, he must obtain a qualified appraisal within 60 days prior to the donation date in order to claim the deduction on his tax return. If the client maintains a valuable art collection, the appraisals are useful for estate planning purposes as well. Life insurance can be the most effective estate planning tool to fund the tax liability on a capital gain valuation.
How to Buy Art
It is common to purchase art through a dealer, but this can be very expensive because of the promotional and overhead costs incurred by the dealer. Instead, if your client likes a certain artist, it is best to contact him directly and visit his studio. The artist may have paintings too large for display in the client’s home but may have some preliminary sketches, black or white versions of colored oils, charcoal drawings, watercolors or other hidden treasures stacked somewhere in his studio. The quality of paper may not be the type one would find in a final product but, nonetheless, it is a way to buy art at more reasonable prices.
Visit antique shops, attics, or estate sales for any deals. The more discerning taste you have about your favorite subject, period, or style of art, the better judgment and assurance you will have when you stumble upon a great deal. Visit galleries that are distant from an artist’s location, and you will find the prices are reduced as well. This does not pertain to nationally or internationally recognized artists.
Visit auction houses on a regular basis and always maintain a file of the catalogs available to the viewing public. These catalogs are historical documents and can be used as a reference guide when valuing artwork for insurance purposes or tracking the pricing on a piece of art or comparable works of art. Scholars do often disagree, and it is wise to find a second or third opinion regarding a valuation or pricing. Always inspect the condition of a piece of work before you purchase it. Photographs in catalogues can be taken from misleading angles to disguise poor quality or an inferior piece.
Maintain a press file on your favorite artist as well. Your artwork will appreciate more in value if your artist gains public recognition on a commissioned piece. The more frequently your artist is listed in published reference guides, the more valuable his work will be at various points in his developing career.
It is wise to start your art collection by first purchasing prints. It is prudent to invest in art from a low-numbered edition (below 15 prints). Do not invest in any art that has more than 200 prints in an edition, since at that volume the run is considered a mass production and is unlikely to become more valuable. If you do collect multiples of a print, there is usually a print in better condition than the others. Do not donate to charity a print that you have purchased in multiples. If the Internal Revenue Service staff learns that the collector purchased and donated multiple copies of the same print, the donation will be limited to a cost valuation and not a fair market valuation.
What to Collect
To decide what to have in your collection, one must first learn about art history. This knowledge can be obtained by taking courses at a local college or continuing education center. It can be obtained by attending art lectures at local libraries or museums and then asking questions of the lecturers. The public library will have sufficient art books for research. Use search engines on the Web like Google or LookSmart to locate information on artists as well. Learn about everything, including manuscripts, sculptures, ivories, and silver and gold. Become a museum member and explore the least visited areas.
The secret to learning the rudiments of art history is to study the major styles of art over the last 50 centuries of human history, including Prehistoric, Ancient World, Medieval, Renaissance, Baroque, 18th Century, Neoclassicism, Impressionism, Modern, and Contemporary Art.
You can start collecting at modest levels of $50-$150 a piece. As you encounter more art, your commonplace tastes will develop to new levels. It is important to have a checklist to review your areas of interest. Examine the work of art in a well-lighted area that is not surrounded by the clutter of other objects. Always bring a magnifying glass and flashlight in order to view repaired sections.
A forgery has the burden to look authentic when in fact, it is not. Being an expert in art will help you identify the passages where the artist changed his work or painted over or moved an area. These are excellent indications of authenticity. Look for signs of repairs or layers of corrosion in materials that have patterns of corrosion. Forged oil paintings are intentionally cracked with a knife. The wear of a work of art should reflect its decades of usage. Every artist in every period or country has a signature style and can be identified to a specific time in his career. Review the back of a piece for identifiable markings from the artist. Learn about the history of the piece and understand where it has been exhibited and who owned it over time. Forgers stuff files with fake references.
Consult with experts (again, start with the International Association for Professional Art Advisors) and never worry about asking foolish questions. Some museums have art clinics where curators offer opinions but no valuations. Sometimes scientific tests, including the use of ultraviolet lamps on sculptures and porcelain, can illuminate that work has been repaired, thus reducing its value.
When purchasing art from areas outside of your local area, question the need of humidity or temperature controls for the item. Many times a canvas piece will deteriorate in quality or condition if moved to a dry or cold area. When purchasing art from tropical areas, be sure to examine the piece within the framework. Many times termites can nest in the closed areas and create damage to your home upon its relocation to the United States. Naturally, this event will devalue your home and art collection.
Advisors and Art
When advising clients on the financial aspects of art collecting, remember the following: You will enhance your personal and ethical working relationship by providing your clients with valuable knowledge and direction concerning the art market and its support services. Art management advisory services can provide a distinguished dimension of professional expertise to your practice. And if you collect art, remember that the constant factor in art is that it is forever changing. Change is always subject to skepticism, but in time it is accepted by society. Art appreciation and connoisseurship is a matter of one’s educated taste.