People who use gold, silver or numismatic coins or gold, silver or platinum ingots to purchase taxable items owe transaction taxes based on the selling price of the taxable item. Many states levy taxes on the sale or purchase of precious metals. 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 the gold ETF is traded like a stock, it will also be taxed as a stock, which is 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.
For individual investors, Sprott Physical Bullion Trusts may offer more favorable tax treatment than comparable ETFs. Because trusts are based in Canada and are classified as passive foreign investment companies (PFIC), U.S. non-corporate investors are entitled to standard long-term capital gains rates for the sale or reimbursement of their units. 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 to fill out additional tax forms, the tax savings of holding gold through one of the Sprott Physical Bullion Trusts and participating in 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. Silver ingots, ingots and coins are normally taxed as collectibles and not as capital gains.
This causes all profitable sales to reach a tax rate of 28 percent, which is much higher than the long-term capital gains rate. Check the status of your shipping address below to find out if you will need to pay sales tax on your order. Precious metals are exempt from sales tax in many states, however, every state in the U.S. The U.S.
government has its own rules and regulations when it comes to collecting sales tax on precious metals. These taxes must be collected on any currency that contains gold or silver but is not recognized as a medium of exchange for the payment of debts and taxes; any coin or ingot made of platinum, palladium or copper; any ingot product made of gold or silver if such ingots are not stamped or stamped with their weight and purity; accessory items; and processed items.