Are Gold Coins Taxable?
Gold coin trading can be an excellent way to generate profit, according to Apmex, but be aware that any profits earned are subject to IRS taxes.
Because gold bullion coins are considered collectibles, and often sell for 28% capital gains tax rate, this article will discuss when these taxes apply and how.
Capital Gains Tax
Gold coins can be an investment and tax liability, both short- and long-term. While 41 states exempt sales tax on American Gold Eagles, this does not exempt their sale from capital gains taxes (both short- and long-term).
IRS laws treat most gold bullion coins like collectibles and any profits you make when selling them are subject to 28% taxes. This includes American Gold Eagles, South African Krugerrands and vintage coins – with one notable exception: when added to a precious metals IRA which provides tax exemption on such investments.
Cost basis is key when it comes to calculating short or long term capital gains taxes on gold coins, as this number represents your original purchase price minus sale value at time of sale. Therefore, it’s essential that you maintain detailed records of purchases and sales as well as current market values so that you can accurately calculate any taxes due.
Sales Tax
Most states don’t levy sales tax on gold coins; those that do do so often as an attempt to encourage trading and investment activity with precious metals. This approach makes sense considering precious metals tend to be resistant to market fluctuation; creating a diverse portfolio could make a state more stable over time.
No matter if or when a sales tax is levied, any profits generated from selling gold coins are subject to capital gains taxes. Calculations is done based on when they were first bought – for gifts or inheritance, their market value on receipt determines their initial cost basis.
The IRS taxes cryptocurrency profits at 28%, considering them long-term capital gains rather than regular income due to investors holding their coins for longer than other forms of investments such as stocks or bonds.
Inheritance Tax
Gold’s longstanding status as an investment asset makes it an appealing inheritance choice, but inheritance of gold coins may come with tax implications that must be considered before selling them for profit.
In general, when inheriting and later selling precious metals from someone who died or gifted them to you, the IRS will assess a capital gains tax based on your “stepped up cost basis” at the date of death or gifting. Typically this rate ranges between 0%-15%-20% depending on income and filing status.
However, many states exempt inherited gold from sales taxation. Furthermore, these coins can also be added to a Precious Metals Individual Retirement Account to avoid paying capital gains taxes when sold at a profit. It should be noted that adding gold coins to an IRA requires reporting their sale to the IRS; keeping meticulous records is crucial in order to submit accurate reports to them.
Gift Tax
The IRS considers gold coins collectibles and therefore taxes them at a maximum rate of 28% when sold, considerably higher than the 15% or 20% long-term capital gains tax (LTCG) assessed on traditional investments like stocks and bonds.
When receiving gold coins as gifts from blood relatives, there will be no tax charged at the time of receiving. However, you must maintain accurate records regarding cost basis and fair market value as of receipt date – which will then allow you to account for potential capital gains taxes upon later selling the coins for profit.
Gold bullion that you give as gifts must also be tracked, and any profits must be subject to either long-term capital gains tax (LTCG) or short-term capital gains tax (STCG).
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