Many people talk lovingly about passing down their collection. I’ve heard grandmothers chat with granddaughters about handing them down their antique china or vintage dolls. I have heard sons hoping to inherit their dad's fishing lures or vintage motorcycle collection.
There is big news looming on the collectibles horizon for those of you who haven’t consider the government’s role in all of this heartfelt family gift giving. On January 1, 2013, the lifetime gift tax exemption is scheduled to change from $5 million to $1 million.
So, if you have been considering passing on those valuable antiques to your heirs, consider doing it before year’s end or get ready to pay a big chunk to Uncle Sam.
In addition, the gift tax rate will increase on January 1, 2013. The giver pays the tax on any amount of valuables over their lifetime exemption. The tax rate is based on the current rate at the time of the gift.
If you are close to your lifetime gift limit and know that your collection--ready to be gifted-- is valuable, you may want to gift those objects now. If you don’t know how valuable your collection is, you should consider getting an appraisal. Time is of the essence.
And another tip, always seek professional advice from a tax expert when it comes to donations, gifts, and tax situations.
If you are gifting a collection, consider these points.
If you want someone or an institution to inherit your collection, gift the collection while you are still alive with instructions. In addition to the tax implications, the plus side of this action is that you can see your heir enjoy the collection while you are still alive.
If you are the heir and have been gifted a collection, think about what amount will be taxed? Collections that were inherited are taxed at fair market value at the time they were inherited.
Capital gains on collectibles such as fine art, musical instruments, coins, etc. is taxed at a rate of 28 %.
No one expects you to have all the answer, so if you have questions direct them to an expert.
Ph.D. antiques appraiser, author, and award winning TV expert, Dr. Lori presents antiques appraisal events nationwide, including in the Tampa Bay area. Dr. Lori is the expert appraiser on the hit TV show, Auction Kings on Discovery. Visit www.DrLoriV.com, www.facebook.com/DoctorLori, or call (888) 431-1010.