For US tax payers, your investment will be taxed at the collectible gains rate, which is your own ordinary tax rate capped at 28%.
Examples:
- If your ordinary tax rate is 18% for the year, then the gain on your Masterworks payout is taxed at 18%.
- If your ordinary tax rate is 32% for the year, then the gain on your Masterworks payout is taxed at 28%.
Exception for 10%+ US Holders (Not Common)
If you own 10% or more of a single painting investment, then you will be taxed at your ordinary tax rate. This may not apply for diversified products.
International Taxpayers