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During the last 10 to 15 years, my best friend spent much of his hard earned money on guitars. All the while, he dreamed of the day when housing prices would drop and allow him to buy a rental property. He recently appraised some of his collection and was pleasantly surprised at the value of his nicer pieces.

We live in a Southern California Beach Community where housing prices are still very high ($600k to the millions). He has recently came across a property that he believes is a great investment opportunity. He wants to sell some of his guitars to fund a down payment on this property. Since he has a good amount of people interested in buying some of his collection, his biggest concern is Capital Gains Tax.

While talking with my friend, he mentioned that the Capital Gains Tax for a vintage guitar (read: Luxury Item) was around 28%. I assume the 28% is levied on the increased value of the guitar not the guitar's selling price. Is this a correct assumption? Are there any kinds of exemptions that he may be able to apply (first time home buyer, et cetera)?

My friend's income varies greatly from year to year (entertainment industry). He is also a part time apartment manager so he lives in a very nice place rent free. He is not married and does not have any children.

Any information or thoughts would be appreciated.
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