A gallery price is an asking price. Value is the open-market price.

Nobody publishes what a painting is worth. But two tax authorities explain in detail, with figures, how they decide what one was worth.

Published by ArtisDomus, written by Polina Surina.

There is no published standard mark-up, no usual gap between a first sale and a resale, and no rule of thumb. What exists is a legal definition of value and the way two tax authorities apply it. One of them also reports how often the values it received were wrong.

A gallery price is the price asked in a private sale, known as a private treaty sale. It is not published or indexed, and a later buyer, valuer or insurer cannot look it up anywhere. There is no price series to compare it with, and it never joins one.

Buyers often mix up two questions, and separating them is most of the work. What will this seller accept? That is about the negotiation. What is this work worth? That is about the object. The first has no published answer. The second has a published test.

For inheritance tax, the market value of any property at any time is the price it might reasonably be expected to fetch if sold on the open market at that time. This applies unless the Act says otherwise (section 160, Inheritance Tax Act 1984). The price must not be reduced on the assumption that the whole property goes on the market at the same time.

Capital gains tax uses the same definition. Market value is the price the assets might reasonably be expected to fetch on a sale in the open market (section 272(1), Taxation of Chargeable Gains Act 1992). It has the same second rule. No reduction is made because the estimate assumes that all the assets go on the market at the same time (section 272(2)).

The definition has three parts: an imagined sale, an open market and a price that could reasonably be expected. It names no seller, sale room, sale date or commission. It tests the object itself. A price one gallery quotes to one buyer on one afternoon tells you about that afternoon. The legal question is what the work would fetch if offered to the whole market.

The second rule in both sections stops a large holding from being valued lower just because it is large.

HMRC’s Inheritance Tax Manual is its instruction to its own officers, and anyone can read it. Its guidance on valuing household goods uses the same words as the statute (IHTM21041, citing IHTA84/S160).

The same guidance sets the rule of evidence. Sales after the death, especially at auction, are the best evidence of open market value at the date of sale. It also says which figure to take from such a sale. The auction sale price is the gross proceeds, or hammer price, before commission and insurance are deducted and without any buyer’s premium added.

This is the most useful rule on the subject. The price reported from a sale room and the price a valuer uses are different numbers. The reported price includes a premium that the seller never receives. HMRC wants the hammer price, with nothing added and nothing taken off. So if you compare a gallery’s asking price with an auction result from the press, you compare a price without a premium against one with it.

If an item has been sold for less than its market value, HMRC tells the taxpayer or agent to enter the full open market value on the form (IHTM21011). The price paid does not settle the value. This works both ways: a bargain does not lower the value, and overpaying does not raise it.

HMRC also tells its officers what to check (IHTM21012). Unsold items in the estate must be realistically valued, with most attention on higher-value items where an adjustment matters. The value given for household goods must fit the value and nature of the deceased’s main home, the estate as a whole and what the taxpayer or agent has said. So a value has to fit everything else that is known.

Read the form itself before you commission a valuation. Schedule IHT407 (HMRC 07/18) has four boxes. Box 1 asks for details of each item of jewellery worth £1,500 or more, with a copy of any professional valuation. Box 3, for antiques, works of art or collections, has no threshold at all. Each item is described and given its open market value at the date of death. If it has been sold, the date of sale and the gross sale proceeds are added. Box 4 takes the total of everything else, including jewellery below £1,500, without listing it. The £1,500 threshold applies only to jewellery, so a painting of any value is listed on its own.

In the United States the guide is IRS Publication 561, Determining the Value of Donated Property (revised December 2025). It is written for taxpayers. Fair market value is the price the property would sell for on the open market. It is the price a willing buyer and a willing seller would agree, when neither has to act and both have reasonable knowledge of the relevant facts.

The publication lists four ways to value property: its cost or selling price, sales of comparable property, replacement cost, and the opinions of professional appraisers. The first applies directly to a purchase.

What you paid, or the actual selling price, may be the best guide to fair market value, under five conditions. The purchase or sale took place close to the valuation date, in an open market. It was at arm’s length, that is, between independent parties. The buyer and seller knew all the relevant facts. Neither had to act. And economic conditions in the open market did not change between the purchase and the valuation date. Because markets move, the price may carry less weight if the sale was not reasonably close to the relevant date. A sale at a fair stand can fail several of these conditions at once.

There is one more condition. If the terms of the purchase or sale influenced the price, they should be taken into account. These include any restrictions, understandings or covenants that limit how the property may be used or disposed of. A promise about where a work may go next, or when it may be resold, is such a term.

For comparable sales, five things are weighed. How similar is the sold property to the one being valued? How close was the sale to the valuation date? Was it at arm’s length, between parties who knew the relevant facts? Was it in the same market? And what were market conditions at the time of sale?

The thresholds are precise. A qualified appraisal is generally required when the deduction claimed for an item, or a group of similar items, exceeds $5,000. For art at $20,000 or more, the appraisal must be attached, and a photograph provided if asked. At $50,000 or more, you may ask the IRS for a Statement of Value before filing the return. The fee is $8,400 for up to three items and $800 for each additional item.

A taxpayer’s appraisal of a single work of art claimed at $50,000 or more must be referred to IRS Art Appraisal Services (Internal Revenue Manual 4.48.2.3(1)). The categories are wide: paintings, watercolours, prints, drawings, sculpture, ceramics, glass, furniture, decorative arts, antiques, textiles, carpets, silver, rare manuscripts, archives, historical memorabilia, antiquities, ethnographic art, coins and collectibles. Panel members say whether each claimed value is acceptable, and propose another where it is not (4.48.2.2.1(3)). Their recommendations are advisory. After review by Art Appraisal Services, they become the position of the IRS.

The Art Advisory Panel reports its results every year. In fiscal year 2023 it reviewed 195 items from 37 taxpayer cases, with a total claimed value of $795,527,954 (Publication 5392, June 2024). The average claimed value per item was $4,079,631.

The Panel recommended accepting the value of 103 items, 53 per cent of those presented. It adjusted the values of 92 items, 47 per cent. Twenty-nine items, 15 per cent, went up: from a claimed $107,010,000 to $159,209,000. Sixty-three items, 32 per cent, came down: from a claimed $150,527,954 to $81,382,500. The total net adjustment across all 195 items was minus $16,946,454, a 2 per cent decrease on the total claimed.

Two points matter for a private buyer. Specialists changed almost half the appraisals, and these were written for a tax authority by people who expected them to be tested. And the errors ran both ways: on fifteen per cent of items the claimed value was too low. A valuation is a number that people who know the market can move in either direction.

What the Panel receives is a practical checklist for a valuation that will hold up. Before the meeting, the appraisers provide images and descriptions taken from the taxpayer’s appraisal: size, medium, physical condition, provenance, any comparable sales and the appraised value. They add the appraiser’s own research on public and private sales of comparable works. The panellists are not told the taxpayer’s name, the type of tax, the tax effect of any adjustment, or who made the appraisal.

The International Valuation Standards Council publishes the outline of its standards and their purpose. There are seven General Standards and eight Asset Standards. The General Standards, IVS 100 to IVS 106, cover the valuation framework, scope of work, bases of value, valuation approaches, data and inputs, valuation models, and documentation and reporting. The Asset Standards run from IVS 200 to IVS 500. The Council presents them as the key global guide for valuers, meant to bring consistency, transparency and confidence to valuations.

The full text is harder to get. You must register, and the download form makes you agree not to share, reproduce or distribute the standards without the Council’s prior written permission. Printed copies are sold through its bookshop.

The Royal Institution of Chartered Surveyors does the same. It names RICS Valuation, Global Standards, known as the Red Book Global Standards. The new edition took effect on 31 January 2025. The Red Book contains mandatory rules, best practice guidance and related commentary for all members. The standards themselves, their numbering and their text are not on the RICS page.

So the standards that define a valuation are not published for the people who commission one. The public, precise rules come from the tax authorities, because they have to defend their figures.

Sotheby’s results index lists auctions by title, date, location, sale type (live, online only or exhibition) and category. It does not show lot prices, estimates, unsold lots or how prices are reported.

To turn a figure you can find into one that means something, adjust it as follows.