What will Obama's tax rises mean for classic car investors?

High earners in the US face a higher tax bill in the future, according to President Barack Obama.

In his keynote budget speech yesterday, Obama set out his plan to cut $4 trillion from the country's deficit within 12 years.

While short on exact figures, the president's pronouncement that "those who benefitted most from our way of life can afford to give back a bit more", will spark alarm bells with many wealthy US citizens.

Those earning more than $373,651 a year are currently taxed at 35% in the US. But with tax on collectibles sold more than one year after purchase set at a less daunting 28%, it is clear that high worth Americans looking to round out their portfolios would do well to consider alternative investments.

But how do investors in classic cars beat the tax man? As cars of any era are not considered collectibles for tax purposes, those in the highest tax brackets will still pay 35% on any sales, but with cars often far exceeding their estimates, this figure should not be off putting.

Citroën 2CVs are highly collectible and affordable

There is better news for those in lower tax brackets. Any gains made that contribute to an annual income of less than $83,600 will only be taxed at 25%.

According to NADAguides.com, 16 of the top 25 collector cars with the greatest appreciation in value between 2004 and 2008 were priced at under $10,000, a statistic that suggests entry level investors would do well to consider heading to their local classic car auction.


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