CGT on sale of inherited artwork

[Smiling1]

I inherited a piece of artwork from my mother when she died back in the 1990s.

I don't have any details about when she bought it or how much she paid for it.

In that case, how is CGT worked out on the income from the sale of the piece of art when it's sold now by me?

As I understand it, CGT is paid on the profit, the difference between what she paid and what it's now sold for (somehow accounting for inflation - how is that done?)

If I don't have records of what she paid for it, how can the profit from the sale be worked out?

Many thanks.

 

[RedOnion]

I inherited a piece of artwork from my mother when she died back in the 1990s.

I don't have any details about when she bought it or how much she paid for it.

What your mother paid for it is irrelevant; her CGT liability extinguished on death. What was it valued at when you inherited it for probate or inheritance tax purposes? That's the base.
In many cases, artworks are inherited without declaration of value for inheritance tax, so effectively have a nil starting value.

 

[Smiling1]

Thank you for the reply RedOnion,

I don't think it was valued when I inherited it.

In that case, does the nil starting value mean that I pay CGT on the full sale amount?

 

[Brendan Burgess]

If it was worth €40,000 when you inherited it and you sell it for €100,000, you will pay CGT on €60,000 , the increase in value since you inherited it.

 

[Brendan Burgess]

In many cases, artworks are inherited without declaration of value for inheritance tax, so effectively have a nil starting value.

Hi Red

Would it not be appropriate to get a valuer to value it as of the date of inheritance?

Of course, this could create problems, if the value brings it over the CAT threshold at the time.

Brendan

 

[NoRegretsCoyote]

Would it not be appropriate to get a valuer to value it as of the date of inheritance?

Valuation of fine art is subjective at the best of times and I would imagine every more so with a lag of 30 years. A contemporaneous valuation would give much more comfort to Revenue but it seems this does not exist.

Perhaps there is Revenue guidance on this, but a quick google did not throw anything up.

 

[Brendan Burgess]

Agree it's subjective. But if it's by an Irish artist, they guys in De Vere's and Whyte's have been in the business for years. They would have all the price information.

For example, "A similar work of the same size and quality by the same artist sold in these rooms for £10,000 in 1995"

Revenue could/would hardly argue with that.

It would depend on the sale price today though. If it's a Warhol selling for €50m, they might allocate resources to it.

But most Irish artists and works owned by Irish collectors, sell at auction for €1,000 to €10,000 today and probably not a lot more than they were worth in the mid 90s.

Brendan