This is called capital gains tax. And since gold is an investment asset, when you sell your gold and make a profit, it's taxed as capital gains. However, depending on how you've maintained your gold, you'll have to pay taxes at the ordinary capital gains rate or at an overall rate of 28%. 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 gold ETFs are traded like stocks, they will also be taxed as a stock, which are subject to a long-term capital gains rate of 15 or 20%. 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. Individual investors, Sprott Physical Bullion Trusts, can offer more favourable tax treatment than comparable ETFs. Because trusts are based in Canada and are classified as Passive Foreign Investment Companies (PFIC), U.S. UU.
Non-corporate investors are entitled to standard long-term capital gains rates for the sale or repayment of their shares. 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 that come from owning gold through one of the Sprott Physical Bullion Trusts and running for 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. 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 the 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. Cortez emphasized the importance of eliminating sales taxes, because in some states you end up paying taxes three times. If you buy gold and silver, you will be charged a state sales tax of 7 to 10%. This illustrates how criminal this is in nine states, he said.
And in every state except two or three, you'll be charged again for the third time. Physical gold or silver holds are subject to a capital gains tax equal to their marginal tax rate, up to a maximum of 28%. The amount of tax due for the sale of precious metals depends on the basis of the cost of the metals themselves. Cortez continued: “This year Kentucky, Mississippi, Hawaii, New Jersey and Tennessee are also considering eliminating sales taxes on purchases of gold and silver.
While many tradable financial securities, such as stocks, mutual funds and ETFs, are subject to short- or long-term capital gains tax rates, the sale of physical precious metals is taxed slightly differently. Unlike traditional investments, such as stocks and bonds, retail investors who buy and sell precious metals must pay sales taxes, but that could change soon. Explaining why precious metals transactions are taxable while stocks and bonds are not, Cortez said that the government and the IRS “classify gold and silver as collectibles.”. The IRS considers that any benefit a customer obtains by selling their precious metal assets is taxable and subject to capital gains taxes.
This means that people who fall into the 33, 35 and 39.6% tax brackets only have to pay 28% for their physical sales of precious metals. If you owned gold for more than a year, this is a long-term capital gain and is subject to the 28 percent tax rate on collectible capital gains. 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. If the units are bought or sold on the TSX or the New York Stock Exchange, investors can pay more than the current net asset value when buying units or shares of the Trust and may receive an amount lower than the current net asset value when selling them.
For tax purposes, selling gold is much like selling other capital assets, in the sense that it ends with a capital gain or loss. . .