Here are three common strategies for minimizing your tax liabilities on gold investments. This is the case not only for gold coins and ingots, but also for most ETFs (exchange-traded funds), which are subject to taxes of 28%. Many investors, including financial advisors, have trouble owning these investments. They assume, incorrectly, that since the gold ETF is traded like a stock, it will also be taxed as a stock, which is subject to a long-term capital gains rate of 15 or 20%. To learn more about these strategies and how to best minimize your tax liabilities, read more.
Investors often perceive the high costs of owning gold as profit margins and storage fees for physical gold, or management fees and trading costs of gold funds. In reality, taxes can represent a significant cost of owning gold and other precious metals. Fortunately, there is a relatively easy way to minimize the tax implications of owning gold and other precious metals. For individual investors, Sprott Physical Bullion Trusts may offer more favorable tax treatment than comparable ETFs.
Since trusts are based in Canada and are classified as passive foreign investment companies (PFIC), U.S. non-corporate investors are entitled to standard long-term capital gains rates by selling or repaying their units. Again, these rates are 15% or 20%, depending on revenue, for units held for more than a year at the time of sale. While no investor likes to fill out additional tax forms, the tax savings of holding gold through one of the Sprott Physical Bullion Trusts and participating in the annual elections can be worth it.
To learn more about Sprott Physical Bullion Trusts, ask your financial advisor or Sprott representative for more information. Royal Bank Plaza, South Tower 200 Bay Street Suite 2600 Toronto, Ontario M5J 2J1 Canada. The IRS classifies precious metals, including gold, as collectibles, such as art and antiques. This applies to gold coins and ingots, although their value depends solely on metal content and not on rarity or artistic merit.
You pay taxes on selling gold only if you make a profit. However, long-term gains on collectible items are subject to a 28 percent tax rate, rather than the 15 percent rate that applies to most investments. And when possible, hold your gold investments for at least a year before selling them to avoid higher income tax rates. However, it will be calculated according to how long precious metals were kept and the ordinary rate of income tax.
Holdings of these metals, regardless of their shape, such as bullion coins, ingot ingots, rare coins or ingots, are subject to capital gains tax. A 1031 exchange could offer you more flexibility, since it would allow you to defer your capital gains tax bill as long as you reinvest those profits in another investment asset. We hope you find this information useful, and feel free to use this page to learn more about your state's tax laws. The following describes how these investments are taxed, as well as their tax reporting requirements, cost base calculations and ways to offset any tax liability resulting from the sale of physical gold or silver.
However, depending on how you've held your gold, you'll have to pay taxes at the ordinary capital gains rate or at an overall rate of 28%. The Internal Revenue Service (IRS) classifies gold and other precious metals as “collectibles”, which are taxed at a long-term capital gains rate of 28%. If you invested in gold and sold it for profit, you're probably looking for ways to minimize your taxes. The IRS allows you to add certain costs to the base, which may reduce your tax liability in the future.
For tax purposes, selling gold is much like selling other capital assets, in the sense that it ends with a capital gain or loss. So, if you have any precious metal on your property (or in a warehouse), the capital gains tax doesn't apply yet. .