Media Coverage
Source: The New York Times
Media Coverage
Press Contacts: Erik Cummins, Matt Hyams, Olivia Thomas
01.12.18
The Tax Cuts and Jobs Act kept a loophole that allows real estate investors to sell property tax-free, as long as the proceeds are used to buy more property. Under the previous tax code, these 1031 exchanges also were open to owners of non-real estate property, such as art, classic cars and franchises, according to The New York Times, but now the exchanges can only be used for real estate.
Previously, under the 1031 exchange rules, many art collectors used profits from sales from their collections to purchase new art. Miami Tax partner Michael Kosnitzky tells the Times that closing 1031 exchanges to art collectors puts collectors in the Middle East and Asia at an advantage over U.S. art collectors because they do not have the same tax concerns. Kosnitzky says that when American investors buy art, they often plan to display the pieces in U.S. museums, but that may be about to change.
“Now, those works are going to be out of the U.S. because of that tax law change,” he said. “Or they’ll be kept in private collections where no one will be able to see them unless you know the Saudi prince or the Malaysian billionaire. That’s not cool.”
Read more about the how this change affects art collectors in The New York Times.