The strategy for being successful in an auction room is very different from online bidding, and for a newbie the experience can be quite intimidating at first.
If you’re bidding at auction for the first time, it’s natural to be nervous about inadvertently making a purchase, like people in comics who sneeze or scratch their noses and accidentally “buy” an item they can’t afford. But in modern auctions this never happens, and auction houses are adapting to the digital age because more and more people are bidding on the Internet. But the strategy for being successful in an auction room is very different, and for a neophyte the experience can be quite intimidating at first. Here are some expert tips on the various aspects of an auction that are good to remember before deciding to bid.
How can I ensure that I am going to make a good purchase? Research, research, research, advises Frances Christie, Sotheby’s director of modern and post-war British art. And don’t be afraid to contact the auction house specialists beforehand: “For example, ask what place the painting occupies in the artist’s work or what the market is like for that painter. It’s like when you want to buy one. house: the houses that are for sale on the same street are worth seeing.
What is the difference between the sale price in the auction room and what the buyer actually has to pay?Auction houses charge a “buyer’s premium” on the sale price at auction, but the percentages vary by company, sale price, and country. In London, Sotheby’s charges a buyer a 25% premium for items sold in the room at a price of up to £ 175,000, plus 20% VAT on that premium. Like most auction houses, Sotheby’s has a tiered system for calculating the buyer charge, which is 20% for prices between £ 175,000 and £ 2 million and 12.5% for amounts over £ 2 million. pounds. The exception is wine, which has a buyer’s premium in London (both at Sotheby’s and Christie’s) of 17.5%, regardless of price. At Christie’s auctions’ s in London the buyer charge is 25% for the first £ 100,000, 20% for between £ 100,000 and 2 million, and 12% for more than £ 2 million. Most auction houses globally charge at least 20%. There may also be an additional charge of 2% to 3% if paying by credit card.
Does the seller have to pay commissions? If you sell an item at auction, you will be charged a commission (plus VAT) which is deducted from the sale price at auction. In general, for items sold for less than £ 50,000 a commission of 15% (plus VAT) is paid. But sellers can negotiate the commission in advance with the auction house. Auction houses do not disclose these figures.
What about capital gains tax (IGC)?The UK Treasury divides items sold into durable or perishable goods for IGC purposes. Durable goods are furniture, paintings, antiques and jewelery, and the IGC is only applied to them if their sale price is more than 6,000 pounds. For items sold between 6,000 and 15,000 pounds, you must calculate the maximum taxable profit (the amount above 6,000 pounds multiplied by five thirds) and the net profit (your profit, less the sales commission and VAT). . Of these two, you will have to pay the lower amount. For objects over 15,000 pounds, the maximum taxable profit must be calculated. Depending on your income level, you will have to pay an IGC of 10% or 20% of this figure, but you will be exempt from paying it for amounts of 11,300 pounds or less in the 2017-2018 fiscal year. Perishable goods, which are exempt from the IGC, are those that are estimated to last no more than 50 years. These include most wines, but not fortified wines, such as port or cognac, which have a much longer expiration date. Vintage cars are also exempt from the IGC. If they are sold then you have to pay income tax on them, but not the IGC. In Internet auctions a person can make a commercial profit of up to 1,000 pounds a year without having to pay taxes. If they are sold then you have to pay income tax on them, but not the IGC. In Internet auctions a person can make a commercial profit of up to 1,000 pounds a year without having to pay taxes. If they are sold then you have to pay income tax on them, but not the IGC. In Internet auctions a person can make a commercial profit of up to 1,000 pounds a year without having to pay taxes.