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 as stocks, they will also be taxed as stocks, 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, such as Gold IRA home storage, 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.
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%. When you sell gold, silver, and other precious metals, you may wonder if you must pay sales tax. Since gold, silver and platinum are considered capital assets, capital gains taxes may apply to their items. The U.S.
Internal Revenue Service (IRS). considers these precious metals (as well as platinum and palladium) to be capital assets. Physical possession of gold and silver, regardless of form, is subject to capital gains tax. This tax comes into play when metals are sold.
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, a state sales tax of 7 to 10% will apply to you. 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.
ETFs that track metal prices give investors access to the precious metals markets by entering into physical contracts for gold or silver or gold or silver futures. When it comes to selling gold and silver abroad, market participants must follow the laws applicable to the sale of gold and silver investments in that particular country. Several products fit this description, and one of the most preferred are gold bullion coins, such as the South African Krugerrand or the American Gold Eagle.