Yahoo Finance Want To Sell Valuable Gold Coins? Here’s How Much Tax You’ll Pay on Profits
Coin collecting might be a hobby for many, but it’s also a way to turn a profit. That’s especially true when it comes to valuable gold coins that sell for thousands or even millions of dollars. If you are considering selling your gold coins, however, be prepared to give Uncle Sam his cut.
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Whenever you buy and then sell assets for a profit, the sale is subject to capital gains taxes. Because gold coins are considered assets, any profit you earn from selling them is taxed by the IRS, according to the Apmex website. The amount of taxes you owe depends on numerous factors, including how long you hold the coins before selling, how big your profit is and your tax filing status.
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Capital gains taxes fall under two basic types:
Short-term capital gains. This type of gain occurs when you buy assets, including gold coins, and sell them in a year or less. Profits are subject to taxation at your personal tax rate, which is determined by income, filing status and other factors. Tax rates for 2024 range from 12% to 37%, according to the IRS.
Long-term capital gains: Long-term gains occur when you wait for more than a year to sell your asset. The long-term capital gains tax rate for most assets, such as stocks or bonds, is 0%, 15% or 20%, depending on your income level and filing status. However, coins are considered collectibles, which receive different treatment.
According to the Journal of Accountancy, gains on collectibles held more than one year are taxed as ordinary income, except the maximum collectibles tax rate is 28%.
In any case, the short answer to all this is that you will have to pay taxes on profits you earn from selling gold coins. If you sell your coins to a coin and precious metals dealer, the IRS will know about the sale immediately .
There are two conditions under which precious metals dealers are legally obligated to report your transactions, according to a blog on the Atlanta Gold & Coin Buyers site:
When a customer sells large quantities of specific coins or bullion
When clients pay $10,000 or more in cash
Failure to report these transactions can result in fines, penalties or criminal charges, so it’s important for both dealers and customers to be aware of when the purchase or sale might qualify as a reportable transaction.
If you want to minimize the tax you pay on the sale of gold coins, it’s best to hold on to them for at least a year and a day to take advantage of the 28% maximum tax rate.
If you sell your gold coins for a loss, which you ideally won’t do, you don’t have to worry about capital gains taxes. Instead, you can claim a capital loss deduction on your tax return to offset capital gains and reduce your taxable income by up to $3,000.
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This article originally appeared on GOBankingRates.com: Want To Sell Valuable Gold Coins? Here’s How Much Tax You’ll Pay on Profits
