Ingots include both coins and bars. Long-term gains on bullion are taxed according to your ordinary income tax rate, up to a maximum rate of 28%. Short-term gains from bullion, like other investments, are taxed as ordinary income. This is the case not only for gold coins and bars, but also for most ETFs (exchange-traded funds) that pay a 28% tax.
Many investors, including financial advisors, have trouble owning these investments. They incorrectly assume that because the gold ETF is trading as a stock, it will also be taxed as a share, which is subject to the long-term capital gain rate of 15% or 20%. Investors often perceive the high costs of owning gold as the trader's profit margins and storage fees for physical gold, or the management fees and trading costs of gold funds. In reality, taxes can represent a significant cost to the possession of 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 favorable tax treatment than comparable ETFs. Because trusts are domiciled in Canada and are classified as Passive Foreign Investment Companies (PFIC), non-corporate investors in the United States are eligible to obtain standard long-term capital gain rates for the sale or redemption of their holdings. Again, these rates are 15% or 20%, depending on revenue, for units held for more than one year at time of sale.
While no investor likes to fill 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 the 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 considers gold to be a collector's item similar to works of art or antiques and is taxed in the same way.
Yes, you should generally report gold transactions to the IRS. However, tax liabilities for the sale of precious metals such as gold and silver are not paid at the time they are sold. Instead, physical gold or silver sales must be reported on Schedule D of Form 1040 on your next tax return. Ingots are a collector's item according to the tax code.
That means you are not eligible for regular treatment of long-term capital gains. In contrast, bullion gains that hold the longest in a year are taxed at a maximum tax rate of 28%. Gains held in bullion for one year or less are taxed as revenue. Here's why it's important to consult with your certified public accountant about taxes on your gold investments.
And when possible, keep your gold investments for at least a year before selling to avoid higher tax rates. You can trade gold futures yourself or own an ETF that conducts the trades, such as the PowerShares DB Gold Fund (DGL). This includes things like stocks, bonds, real estate investment trusts (REITs), and collectibles such as gold. This fund buys a series of gold futures contracts that should have essentially the same performance as a gold index that the fund is trying to track, although there are anomalies in futures markets that can cause deviations.
In other words, gold coins are taxable based on their total value, rather than just weighing how much gold they are made of. You only pay taxes when you sell your gold in cash, not when you buy more gold with that money. This includes coins and bars measuring 1 kilogram or 1000 troy ounces in weight respectively, along with any gold or silver item that has more than 50% pure gold or silver content. If you invested in gold and sold it for profit, you're probably looking for ways to minimize your taxes.
There are several ways to invest in gold, but often investors will invest directly in what is known as “gold bars”. .