A roman poet once said: “Everything is worth what their purchaser will pay for them”
And in the context of classic cars, never have truer words been uttered. So often dismissed as the exclusive domain of true car fanatics and or the fabulously wealthy, many people often overlook and underestimate the vast potential classic cars have as investment options. If you make sure that you carry out due diligence, research the various models carefully and have a good grasp as to the actual market and the market value for your car then you will be able to make a decent return on your investment.
Classic cars have proven to be an especially wise choice of investment commodity in the UK thanks to various tax concessions and discounts which have been made available for the owners of classic cars. Not only are classic cars (as defined by statute) fully exempt from road tax liability, but will also be fully exempt from tax on the proceeds of the sale.
UK tax law provisions currently have something called “capital gains tax” which is intended to tax people on the proceeds of any sales or disposals of assets that they may make. With the highest rate of capital gains tax chargeable currently set at a rather hefty 40% classic car owners have been pleasantly surprised that because of a loophole they are able to keep all of the profits made by selling the classic car.
Capital gains tax automatically excludes a number of different items from taxation with the main criteria for such exemption being the useful lifespan of the asset in question, and if the predicted useful lifespan of the capital asset is predicated at 50 years or less then the asset is exempt from tax. This has been used by many high income earners in the UK to reduce their tax liability over all, as when they sell the car no tax is charged allowing them to keep 100% of the profit!
This rules applies regardless of the reason for the purchase of the classic car so even if you purchased the classic car with the sole intention of making a profit on it, the profits of the sale are totally tax free. Sure, you will need to deduct various other expenses such as the cost of valuation, insurance, perhaps even an auction fee (if you sold it via an auction) but you can be rest assured the lion’s share of the money will go directly to your pockets.
Some of the profits that have been made are simply astronomical and it is amazing that someone, out there has the money to spend on the car in question, and the old adage of “more money than sense” certainly springs to mind! For example, a 1967 Ferrari 330 GT was once sold in the US for a whopping $9.400.000.
Whilst this is a rather amazing amount this is more of an exception than the rule, however there is defiantly a great deal of investment potential for classic cars.