The John Morey Photography Contemporary Fine-Art Lease Program

John Morey Photography | Natural Fine Art Photographics & More is proud to offer unique leasing options to residences and businesses of all sizes, styles, and budgets. An art lease is an alternative way of decorating your walls, instead of the typical straight pay-in-full purchase.

What is Art Leasing?

Leasing is an excellent option for companies or families who love good artwork, but have a budget to consider. The art cost is leased over the term of the agreement as a small regular monthly fee.  At the end of the lease, the artwork either returns to the artist or is retained by the buyer, depending upon buyer’s intention and structure of the desired lease agreement.

Purchasing contemporary fine-art is never a decision to be taken lightly, because almost always the sale is final and you want to make sure that not only do you have the right pieces that you will enjoy for years to come, but that they are the right size, match the existing décor smartly, and really add the intrinsic and lasting value you as a current connoisseur or future collector expects.  The art lease allows added levels of flexibility in purchasing, and can be the perfect solution to the décor or collecting requirements for you or your business.  There are several benefits about art leasing the individual or business should consider.

Benefits of Art Leasing in General:

As a collector or connoisseur looking to enhance the interior design of your residence or business, the art lease allows those on a limited budget to purchase desired pieces in structured low monthly payments over time through the term of the lease, rather than all in one lump sum immediately at time of purchase.  At the end of the lease term, official ownership of each piece transfers to the purchaser for the grand price of $1 each, and any further official purchase documentation related to the value of pieces is given by the artist.  The monthly lease payments and final payment of $1 each have obvious benefits for those individuals on a budget, but there are also large additional added benefits to businesses participating in these programs, which will be explained later below.

Furthermore, if at certain structured points in the lease term you desire one, some, or all of the pieces to be refreshed with other new and different pieces, this can be done for relatively small fees, associated with the production, shipping, and installation of new original works and removal of old ones.  This benefit allows you to ensure that your space is continually refreshed and revitalized.  Frequent visitors will feel the added freshness this adds to the surrounding environment, and allows you to maintain an impression of always being fresh, as older original works are replaced by new ones.  As your furnishings and décor change in a room or space, you can refresh the artwork and always have the right piece for the appearance of the room.  You may also be unsure about what pieces of artwork you are looking for, or what type of effect you wish to produce by having them. By leasing, you have the flexibility to display different pieces or styles for finite periods of time, allowing you to “test-drive” what kind of effect each art piece has on the environment.

Lastly, at the same certain points spoken about above, if during the term you decide that you no longer desire some or all of the art pieces, you can choose to fully or partially cancel by returning some or all of the pieces to the artist.  This can be done for relatively small fees per piece, associated with the removal, shipping, and updating of the lease.

General Benefits of Art Leasing for everyone:

Fill Your Whole Space: Nothing changes a room or makes a statement like art on the walls! An Art Lease will help you fill all your empty spaces at once to showcase otherwise expensive art in a very affordable manner.

Affordability: When you are trying to keep an eye on the bottom line, purchasing art isn’t always an option. Leasing artwork allows you to enjoy it for a fraction of the purchase price. Varied lease structures are available, with small up-front initialization costs to get started and installed, with flexible terms and low monthly payments to fit your budget. Flexible lease options allows for inexpensive, regular décor changes.

Keep The Environment Refreshed and Exciting: Refresh the art pieces periodically for an exciting and always changing environment for your guests. You can change your surroundings as often as every six months with an Art Lease, and avoid buyer’s remorse.

Try Before You Buy With No Commitment to Buy: Are you looking to make a purchase, but not sure of the piece, or if the space for it is best? Try out works of art without a commitment to purchasing them. An Art Lease allows you to live with it before committing to a purchase, and change out if needed.

Apply Lease Payments Towards Purchase Options: Portions of Art Lease payments can be converted to a purchase option during regular intervals in the structured lease-term. The longer the term and the more lease payments made, the smaller the buy-out amount. On Lease-To-Own structured leases, final buy-out at end of Lease is $1.00!!!

Extra Benefits of Art Leasing for Businesses:

For a business wishing to outfit their space with fine art, you have special accounting and tax considerations to look at, which the individual does not get to worry about.  Please forgive the brief accounting lessons I am about to provide, but it helps set the stage to understand the awesome benefits an art lease allows businesses.  Primarily it is important to understand the difference between operating expenses and capital expenditures.  In addition with capital, it is important to understand what capital expenditures qualify for depreciation and which do not.  Let’s start by explaining the traditional purchase of fine art by businesses, why they do so, and how that usually affects the bottom line.

Businesses often invest in art in the same manner they do in other design elements. In a professional setting, displays of fine art in the lobby or in office hallways can impress clients or help employee morale. In high-end hotels, resorts and spas, fine art is often part of the luxury atmosphere that guests have come to expect. For service providers, such as medical offices, the impact of walking into an office displaying fine art can be equally important if it helps put the patient at ease. The “WOW” factor impact of well-displayed fine art in the work environment can significantly influence the customer’s impression of a company and the type of people working for the company. Visitors have often remarked that an office with art seems more accessible – more like a home – and that it engenders a strong positive response from people working in the office. Employees enjoy the experience of working in such an environment and love coming into work when it seems to encourage an atmosphere of creativity and a stronger work ethic.

In ALL instances above, the art is used by the business with the intention that it will contribute to the bottom line in some way. Similar to the purchase of computers, vehicles, office furniture, or any other assets used in conducting business, where the asset will be used for years to come, fine art purchases fall under the category of capital expenditures. Because the cost of the benefit will last substantially beyond the end of the current taxable year, a capital expenditure is almost always tax depreciated over time.  However, unlike most other assets used in income-producing activities, fine art is almost never able to be depreciated.  This makes it difficult for businesses to justify the buying of art for their income-producing environments, because it usually involves big expenditures, which they will never receive any tax benefit for, either in the current year for the full amount, or in the future by depreciating the amounts.

To be depreciated under basic Internal Revenue Service guidelines, assets must meet four general requirements. Three of these are not at issue for most art used in business: First, the property must be owned by the taxpayer. Second, the property must be used to produce income. Third, the property must be expected to last more than one year. Failing to meet the fourth requirement is why nearly all art used in business is not depreciable: The property must have a "determinable useful life." Accordingly, the IRS has confirmed in Revenue Ruling 68-232 that it does not consider fine art to be depreciable.

So what does an Art Lease really offer the business? Enter the term “Operating Expenses”.  Operating expenses are those incurred in carrying out an organization’s day-to-day activities, but not directly associated with production.  Operating expenses include such things as payroll, sales commissions, employee benefits, transportation, travel, loan amortization, repairs, taxes, rents, and asset leases.  Did you see that last part?

Let’s take a similar example where a company purchases office furniture.  The purchase of office furniture makes you the owner, and it will provide benefit for years to come, so it is a capital expenditure, the cost of which will not be deducted in the current year, but instead will be depreciated over future years.  Now let’s say that you as a business owner does not want to make that kind of very large capital expenditure, so maybe it makes more sense to lease the office furniture for the next few years instead of buying it.  In that case, the regular periodic lease payment is accounted for as an operating expense, the full amount of which is tax deductable in the current year the cost was incurred, instead of depreciated over future years.  In regards to this example of buying (capital expense) or leasing (operating expense) office furniture, one way or another the cost will be tax deducted, either now or later.  But in regards to buying art as a capital expenditure, you lose the ability to deduct the expense, now or later.

With the John Morey Photography | Fine Art Photographics & More art leasing programs for business, your costs to lease the fine art are considered operating expenses.  Each month that you pay your lease amount, that amount in full will be accounted for to be fully deductible at year-end, in the immediate tax year that the expense was incurred.  In the case of a pure lease where the intention is to always refresh the environment with new pieces and never own outright, the small payments make great sense.

In the case of a “Lease To Own” contract, upon completion of the lease term and the final lease payment, I will then turn right around and sell you each piece of art for $1.00 each!  Do you understand what is happening here? You get to fully deduct every bit of money you spend on the lease as an operating expense, and then at the end of the lease when you actually purchase the art, it will only cost you $1.00 – which is a capital expenditure that you will never get to depreciate – really, who cares if you don’t get to deduct one dollar???  That single benefit is pretty impressive, but think now about the other side-benefits a business might receive from an arrangement like this.

How about “Conservation of Capital”? The capital conserved, while leasing art as an operating expense, can be utilized for other more important capital expenditures – doesn’t that make good sense?

How about “Conservation of Credit”?  A lease is not a loan.  Borrowing reduces lines of credit.  Leasing is an operating expense and hence, allows the business increased borrowing capacity, without being tied-up on a loan to finance your art purchase.  Furthermore, loan financing would only allow the interest costs to be included as operating expenses, whereas a lease allows 100% of the cost to be included as operating expenses.

Consider this a way of informally financing an art purchase, by being off the balance sheet and not on it.  An operating lease keeps the debt, and the corresponding asset, off of the company’s balance sheet.  Therefore, borrowing debt covenants are circumvented, financial ratios are enhanced, and borrowing capacity is increased – all while enhancing your business and work environment with beautiful art imagery. The advantage to potential customers of an Art Lease is that that they have access to high quality art works on a cost effective basis and with a high level of flexibility built into the terms of the rental agreements.