The Internal Revenue Service (IRS) classifies gold and other precious metals as “collectibles” that are taxed at a long-term capital gain rate of 28%. Gains on most other assets held for more than one year are subject to long-term capital gain rates of 15% or 20%. This is the case not only for gold coins and bars, but also for most ETFs (exchange-traded funds) that are taxed at 28%. Many investors, including financial advisors, have trouble owning these investments.
They incorrectly assume that because the gold ETF is listed as a stock, it will also be taxed as a stock, which is subject to the long-term capital gains rate of 15% or 20%. Investors often perceive the high costs of owning gold as dealer margins and physical gold storage fees, or management fees and trading costs for gold funds. In reality, taxes can represent a significant cost in 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.
Individual Investors, Sprott's Physical Bullion Trusts May Offer More Favourable Tax Treatment Than Comparable ETFs. Because trusts are domiciled in Canada and classified as Passive Foreign Investment Companies (PFIC), U, S. Non-corporate investors are eligible for standard long-term capital gains rates on the sale or redemption of their shares. Again, these rates are 15% or 20%, depending on revenue, for units held for more than one year at the time of sale.
While no investor likes filling out additional tax forms, the tax savings of owning gold through one of Sprott's physical bullion trusts and holding the annual elections can be worthwhile. 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. In general, you have to pay taxes when you sell gold if you make a profit.
According to the IRS, precious metals such as gold and silver are considered capital assets and the financial gains from their sale are considered taxable income. Physical holdings of precious metals such as gold, silver, platinum, palladium and titanium are considered by the Internal Revenue Service (IRS) as capital assets specifically classified as collectibles. Holdings in these metals, regardless of their form, such as bullion coins, bullion coins, rare coins or bullion coins, are subject to capital gains tax. The capital gains tax is only due after the sale of such holdings and if the holdings were held for more than one year.
The IRS taxes capital gains on gold in the same way it does on any other investment asset. But if you have purchased physical gold, you probably owe a higher tax rate of 28% as a collector's item. Avoid investing in physical metal and you can minimize your capital gains taxes at the ordinary rate of long-term capital gains. And when possible, hold your gold investments for at least a year before selling them to avoid higher income tax rates.
The IRS classifies precious metals, including gold, as collectibles, such as art and antiques. This applies to coins and gold bars, although their value depends solely on the metal content and not on rarity or artistic merit. You pay taxes on selling gold only if you make a profit. However, a long-term gain on collectibles is subject to a tax rate of 28 percent, rather than the 15 percent rate that applies to most.
You only pay taxes when you sell your gold in cash, not when you buy more gold with the money. And since gold is an investment asset, when you sell your gold and make a profit, it's taxed as capital gains. If you die before you sell and the gold is inherited by your heirs, your cost base will be the fair market value of gold on the date of your death. Tax rules are different for people who regularly sell gold coins with the intention of making a profit, for those who collect coins as a hobby, and for taxpayers who keep their gold coins as an investment.
In other words, gold coins are taxable based on their total value, rather than just weighing the amount of gold they are made of. This includes coins and bullion weighing 1 kilogram or 1000 troy ounces respectively, along with any gold or silver item that has more than 50% pure gold or silver content. . .
