Leasing Art

Prompted by the discussion about leasing art in Robert Genn’s book, The Painter’s Keys, Nancy Moskovitz is wondering how rental agreements in the U.S. might be different from those in Canada (where Genn resides).

Genn mentions the difference between “capital leases” and “operating leases." (pages 109-110)

With a capital lease, the periodic payments “are considered to be payments on a financed purchase, and the original price of the painting is capitalized and depreciated while the calculated interest is deducted as an expense over the term of the lease.”

The operating lease is “a rental for a given period, at the end of which the painting may be purchased for the then fair market value. In this case the periodic lease payments may be deducted as an expense and the purchase price paid at the end of the lease is capitalized and depreciated as office furnishings.”

In his book, The Business of Being an Artist, Daniel Grant cautions that the IRS is leery of “depreciating art,” since it doesn’t usually depreciate as normal items that succumb to wear and tear. (see pages 59-63)

Nancy is looking for an agreement that is slightly less formal than the contract in Tad Crawford’s Legal Guide for the Visual Artist (which, by the way, should be on every artist’s shelf). She’s also looking over the agreement in Art Office.

Well . . . I’m no attorney. I just wanted to say that. I’m no attorney. Anyone have any advice? Any better sources for “art rental” contracts or agreements?

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1 comment to Leasing Art

  • Alyson, I asked my husband who owns his own business and building about claiming depreciation. He legally depreciates the real estate, which also traditionally increases in value.