Pace’s Glimcher said he expects the supply currently fueling the top end of the market to wane in the new year. “We’re facing a disadvantageous tax situation coming up,” he said, referring to the elimination of Section 1031 of the tax code as of January 1, if the current bill becomes law. (The provision allows U.S. collectors to forego capital gains taxes on artwork sales if profits are invested in a similar asset for investment purposes.) Heirs will also have less reason to sell, if the estate tax is done away with as proposed, removing the first of the three D’s—death, divorce, and debt—that also drive supply in the market.
The bill’s elimination of deductions for state and local taxes could also hit demand, Glimcher said, since American collectors tend to live in high-tax states like New York and California on the east and west coasts.
“It’s going to affect the very high end of the market for Americans and Americans make up a very big chunk of the very high end of the market,” he said. “Some major collectors are going to sell a little less, which is going to push up the prices and also mean that fewer people will be able to participate.”
While in the sunshine state this week, though, the feeling was: make hay.