Art as an investment in times of crisis – a global trend

Times of crisis are usually harshly reflected in global stock market figures. Yet there seems to be an investment that proves its worth even in economically difficult times. A look at the auction houses in big metropolises, such as London or Paris, shows that art is currently a safe investment.

In this article we will explain the potential that lies in this capital investment and for whom it may be worthwhile.

What are the advantages of investing in artworks?

Art is to be seen as a safe investment, the value of which does not depend on economic crises or similar events. Regardless of whether it is classical or contemporary art, demand is very high in all areas. Another advantage is that the art world is very diverse. For example, investors can invest in paintings, photographs or works of sculpture. It is important to plan for the long term, as it can take some time for works of art to appreciate in value.

Which artworks are recommended for investments?

If you want to invest your money in artworks and be on the safe side, you should look for works by established artists. This way there is a higher probability that the value of the artworks will increase later on.

But of course it is also possible to take a certain risk and invest your money in new, unknown artists. This is already an advantage at the time of purchase, because the works of unknown artists are still offered at affordable prices. The higher their degree of popularity then becomes, the higher the price of their paintings, sculptures and similar.

But it is often not so easy to realistically assess artistic potential, especially with unknown artists. Yet there are some points that play a role in this context:

– Previous career of the artist
– Which museums or galleries have exhibited their works
– Whether they are represented by renowned art dealers

It can also be worthwhile to take a look at the prices of the artworks and their development before investing.

Tax considerations when investing in art – what is there to consider in this area?

It is important to pay attention to the speculation period if purchased artworks are to be resold for profit. There should be at least twelve months between the purchase and the sale of a work of art. Otherwise the selling price must be taxed, whereby the purchase price is still deducted and tax is only paid on the profit. In general, private sales are tax-free up to an amount of 600 Euros. The same applies if the sale takes place more than 1 year after the purchase. But beware: If many works of art are sold within a short period of time, the tax authorities may charge you for commercial trade. Another important point for companies, practices or law firms: The purchase of art is tax deductible.

Learn more about investment possibilities with KENSINGTON Art!