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What are the tax implications of selling art?

If you sell a piece of art through the open market, such as sale through public auction, you may be liable to capital gains tax or inheritance tax.

However if you go through a Private Treaty Sale to a certain museum or charitable organisation these charges could be avoided. Under the terms of a private sale, you would agree terms with one buyer for a fair market value less the tax implications. This means a museum or similar would pay around 70 per cent of the item's agreed market value.

A piece agreed to be worth £100,000 will therefore probably only sell for £70,000. The seller can also usually receive 25% of the saving back from the museum too. So here, if the total tax bill, for argument's sake was the £30,000 subtracted from the market value 25% would be £7,500. So, in total the seller could expect to receive £77,500 for the piece.