| Fine Wine as an Investment |
Some individuals are interested in investing in fine wine for fun and profit. What are the cost basis rules and tax rate that apply to the sale of wines held as an investment?
The wine asset category is classified as a collectible and receives the "collectibles" tax rate on capital gains--currently 28%.
The major difference with wine as an investment is that ongoing carrying costs can be claimed as an adjustment to your tax basis for computing the gain on sale.
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Costs that would be eligible to add to your purchase cost for the wine could include:
• Supplementary insurance carried specifically on the wine inventory
• Extra utility costs for maintaining the proper wine storage temperature
• Equipment purchased for wine storage (depreciation expense)
• Allocable real estate taxes, utilities, and fire insurance for the square footage of a dedicated investment wine storage room in your home
• Professional consulting services of wine experts hired to advise you on wine investments
• Shipping, handling, and delivery costs
• Depreciation expense and operating costs for an off-site dedicated wine storage room
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| Between two evils, I always pick the one I never tried before. --Mae West |
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