Wall Street Metals are experts in the precious metals industry. We’ve got thousands of happy clients over the years to prove it, and we offer the absolute best prices on gold, silver, platinum, and palladium available online.
We even offer to beat any written quote from a competitor, so we can say that we provide the best deal with absolute confidence.
And while there are profits to be made in the world of precious metals, there are also various tax implications you need to be aware of if you’re looking to invest. With this in mind, we’ve decided to put together this guide on everything you need to know about capital gains tax on precious metals, so you understand fully what you’re getting in to.
Capital Gains Tax on Precious Metals – The Basics
If you have holdings in gold to silver, platinum, or palladium, they are considered by the IRS to be collectibles. This means they have a cap of 28% when it comes to capital gains tax, which is in place to encourage long-term investment.
Of course, this does some with some caveats and rules.
For starters, it only applies once you actually sell your pieces. Capital gains tax on precious metals won’t be assessed until this happens, meaning that if you buy gold, for example, and it increases in value while you have it in a depository, the capital gain won’t be realized because it hasn’t been sold.
This means that the most vital element of working out how much capital gains tax you might be liable for is determining your cost basis, otherwise known as the original cost of the metals in question. You use the original cost you purchased your pieces for as a basis, and work out the capital gains tax based on the profit made when you sell.
Precious Metals as Inheritances and Gifts
While the above forms the basis of understanding when it comes to capital gains tax on precious metals, there are conditions that may be applicable to your personal situation that will influence how much capital gains tax you pay.
Lots of people receive gold or silver as part of an inheritance, for example, for which there is a different method used for calculating the original cost basis and therefore capital gains tax owed.
With inheritance, instead of working out the original cost basis of your coins from the date of purchase, you use the day the person passing them on to you passed away. This forms the basis of the amount you will owe once sold, and how much capital gain has been realized in the eyes of the IRS.
When it comes to tax on precious metals you receive as a gift, you might expect the cost basis to be calculated from the day you are presented with the precious metal, however, this is not the case. Instead, the market value of the original purchase date of the metals from the gift-giver is used.
At the end of the day, it’s as simple as understanding that if your precious metals are worth more than they were originally purchased for, you’re almost certainly going to have to pay a rate of 28% tax on the profits. Unless they were inherited, then it’s calculated from the death of the person who passed them down to you.
However, this isn’t always the case…
Short-Term, Mid-Term, and Long-Term Capital Gains Tax on Precious Metals
As we’ve mentioned, to encourage long-term investments, capital gains tax is capped at 28% for long term investments. This is the case if your tax bracket is between 33% and 39.6% and in a nutshell, even if your profits put you into a higher bracket, the tax on precious metals you will pay is capped at 28%.
But remember, qualifying for long term investment status means you have to hold on to your coins for a longer period of time (more than one year) between buying and selling.
When it comes to shorter time periods, short-term capital gains on precious metals apply. These are taxed at ordinary income rates, so if you’re within the 10-25% bracket, your gold, silver, platinum, and palladium assets will be taxed at the standard rate of tax, which is 10%, 15%, or 25%, depending on the total amount earned.
Capital Gains Tax on Precious Metals if You Lose Money
Precious metals are a stable investment that see increases in price over time as a general rule. But in the (very) unlikely event that you lose money when you sell your gold, silver, platinum, or palladium, then there is no capital gains tax to be paid.
That’s because you will actually have a capital loss on your hands, rather than capital gain.
While this isn’t exactly good news because you’ve lost out on money, you could actually use your capital loss to offset capital gains in that tax year, or even tax years down the line.
You can also offset this loss against your standard income, but there are a number of limitations and limits in place for this which you’d have to discuss with a tax professional.
Invest Today with Wall Street Metals
If you’re looking to invest in gold, silver, platinum, and palladium, then there’s no better place to do so than with Wall Street Metals. We provide answers to all questions you might have surrounding the best practices and nuggets of information, and have years of experience in the industry.
In these years we have accrued a sensational amount of knowledge as well as vital connections within the industry, enabling us to provide gold, silver, platinum, and palladium to our customers as close to spot price as possible.
And like we mentioned earlier, if you provide us with a written quote from a competitor, we guarantee to beat their price.
We provide a fantastic service bespoke to your requirements and pride ourselves on the high standard of customer service we provide to you. We also offer expert IRA advice, live spot price checkers and historical data on all pieces we stock, so you can make a truly informed decision on your investment.
For more information, give us a call on 1-800-632-4154, or email email@example.com and one of our friendly team will get back to you promptly to discuss your requirements.