December 31st is the last day you can gift your Fine Art to an organization, IF you want to get the Tax Deduction on your 2017 Taxes.
First, let’s back up a little ~ You may be wondering why You would want to Gift your Fine Art instead of Selling it? You may be thinking you will get less money this way or the process would be more difficult….We understand your concerns ~
Ask yourself the following questions:
- How long are you willing to hang on to a ‘piece’ of art you no longer love? If you are not hanging it in your home, then are you storing it correctly? Let’s be honest, no one wants to buy broken or damaged art. And why hang on to something you do not love, especially if you may eventually have to toss it anyway?
- Are you prepared to dedicate your time for the next year to sell the artwork? Yes, it can take that long, sometimes even longer.
- Are you prepared to lose up to 40% of the selling price? Perhaps, you found a third party that will help you sell the ‘piece’. Which is amazing and one way to go as you will not have to dedicate your time…. but, you do have to pay someone to Sell the ‘piece’ for you. That can be a pretty penny and you still may have to wait a while.
Selling your artwork, that you no longer love, is a viable option. But, if you are not willing to spend time or money on this process then why not Donate to an organization? There are a few steps you need to follow, but for the most part it is a much easier and quicker process.
4 Steps involved in the Charitable Gifting Process:
- Find an organization that is able to receive donations, individuals are not accepted for this option. Talk to your CPA about this.
- You have to have an appraisal, by a qualified appraiser, and not more than 60 days prior to donating the art. We can help you with this, just give us a call 619/929-6192.
- You must get the IRS Form 8283 (1) Filled out by Your Tax Adviser on behalf of you (the Donor), an accepted person by the Organization (the Donee), we highly suggest someone on the Board of Directors, and the Qualified Appraiser. (2) The Fair Market Value must be on this form; otherwise, you will only be allowed a tax deduction on the amount the donee auctions off the piece, which will likely be valued at a much lesser value than Your artwork is worth. **The Fair Market value (FMV) can only come from an appraiser in this case. (3) Make sure the Organization’s Tax ID Number is on the form.
- If you want to get the Tax Write off for this year, 2017, then you have to donate and complete the Form by December 31st; otherwise, you will have to wait until the following year.
You have to … have to…. make sure these steps are done properly. If it is going into auction, you need to make sure you specified the Fair Market Value on this form which is signed by the Organization before Auction. In order to have the correct FMV, you must have your Art appraised! Trust us, as we have seen paintings, which valued highly in the appraisal, auctioned off at a much lower price because the FMV was Not specified on the form….first, which means YOUR, the donor’s, Tax deduction will be smaller than what you believe it should have been.
As always, check with your C.P.A./ Tax Adviser before Charitable Gifting, since Tax laws change each and every year.
If you have further questions regarding the Charitable Contribution/Gifting or the Selling Process email us at firstname.lastname@example.org or you may call our Appraiser, Ninya Lee Greek, direct at 619/929-6192.