Understanding Taxes
Within the United States, art is taxable. Three types of tax are essential for collectors to grasp: sales tax, use tax and capital gains tax.
“Sales tax and use tax are kind of a yin and yang they’re supposed to work together,” Pamela L. Grutman, a tax lawyer at the boutique law firm Olsoff|Cahill|Cossu LLP, told me in an interview.
As Grutman, who works with clients in New York’s art and culture space, explained, sales tax applies to art purchases as it would to any other commodity. If you walk into a gallery and buy an artwork, the vendor will apply and charge an additional percentage of the sale as tax.