What is the financial benefit of renting art?

Tax rules limit one’s ability to depreciate art.

Many companies make the mistake of purchasing high end decorative art without researching the tax rules surrounding the purchase – which gets someone in trouble with the CFO! Many companies have great art, but are stuck holding the asset on their balance sheets with no way to take advantage of depreciation as they would with office furniture, PCs, service vehicles, etc.

Renting art allows you to make fine art an expense.

If you buy fine art, the art becomes a nondepreciable asset offering no tax advantage. On the other hand, you can expense the cost of renting fine art, thereby lowering your overall tax bill.

Deploy capital effectively by renting.

Why lock up capital with an art purchase when you can rent it instead? This allows you to deploy the capital that you saved into your core business - and with a decent ROI, the money you save by renting allows the art to pay for itself.

Protect your business in a down economy

Let’s say your business takes a turn… When you try to resell art in a down economy, you will not get full value for the pieces – if you even know who to sell it to! It’s easiest just to return the art to us. We’ll be here when you ramp back up!

But why can’t I depreciate art for my business?

You risk scrutiny from the taxman.

Why risk an audit because of how you spent your decorating budget? The IRS has confirmed in Revenue Ruling 68-232 that fine art is not depreciable, with few exceptions. For those finance professionals reading this, using MACRS to depreciate fine art is questionable, as fine art is not subject to “exhaustion, wear and tear, or obsolescence.” The IRS has not provided any firm guidance on what constitutes “wear and tear” for art, rendering any effort to depreciate fine art difficult. The consensus of financial professionals is that as long as the IRS does not provide clearer guidance as to what constitutes wear and tear, you open your business up to debate with the IRS if you attempt to depreciate fine art.