The reason why NFT artwork is worth millions isn't just for a speculative market so another chump will buy it from you at a higher price, but it also has another value. Like all artwork it is used for tax avoidance. The high price of NFTs allows a wealthy elite to squirrel away millions to accrue value without being taxed. They are more handy than a real piece of artwork or some expensive property in London because a digital image isn't vulnerable to physical damage or maintenance costs. It's obvious why this shit is exploding.
NFT's pay capital gains tax, no? (in the us)
It's the long con—if you buy an NFT, get it appraised at some crazy high value, then donate it to a museum or something that counts as a donation and it's a tax writeoff. I buy an NFT for $20, I get it appraised at $20 million and then I donate it, and now I'm paying $20 million less in taxes on my other income. This is how art works, I'm positive it'll be how NFTs work as well, except this is even easier since there's nothing physical at all.
I see this a lot on the internet but it's only partially true, like it only happens for the 0.1% of collectors who can afford to slosh $80m in wet paintings into freeports every season. The vast majority of collectors just want to sell their work for more then they paid for it 20 years ago. Return expectations are still wildly inflated, but the whole market actually isn't just a laundering scheme, and most "investors" in conventional art break even at best.
Source: I'm the brilliant but sexy art history major in every airport novel you've read
Oh for sure, only the 0.01% or higher who can afford this do this. You're right that most investors are doing this because they hope to sell for more than they buy, and will have to pay capital gains tax.
I think it's the same with a lot of the art idea, yeah some of it is because of money trafficking and tax evasion, but also its a really inflated market with a bunch of rich people and galleries ready to spend whatever they want and a pretty hard exclusive club to actually get demand in.
What if no museum wants the ugly lion man picture?
Artwork pays capital gains in the US upon sale yes
They can use loopholes like buy/sell in cheaper places by moving artwork around for sale and 1031 exchanges where they reinvest gains into more assets in the same tax year.
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Apparently they are using QOF funds to defer gains tax for NFTs
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