Precious metals investing has become an appealing way to maintain financial security during times of economic volatility. However, buying and selling physical bullion or coins comes with specific tax obligations at both the federal and state levels. As such, before storing money in gold or silver, it’s important to consider how these investments are taxed. Here’s an overview of what investors should know to successfully manage their transactions.
Tax Implications of Gold & Silver Assets
State Sales Tax Regulations
Every state has the ability to set its own sales tax rate for product purchases. In recent years, many states have chosen to eliminate sales tax on precious metals investments or only tax purchases below a certain amount. In California, laws impose a 7.5 percent tax on single transactions that are less than $2,000. This threshold was recently adjusted in January 2023 from the previous $1,500 minimum. In turn, investors wishing to avoid state tax liabilities will need to buy bullion or coins in bulk.
Capital Gains Tax Requirements
The IRS considers precious metals sales to be taxable. Thus, any profit made from selling gold or silver is subject to capital gains tax. This happens when bullion or coin pieces appreciate in value after they’ve been purchased and are then sold for a higher price. Depending on whether the asset was owned for more or less than a year, it may incur long- or short-term capital gains tax.
Furthermore, the IRS classifies precious metals as collectible items, placing them into a higher tax bracket. As a result, they can be taxed up to the maximum level of 28 percent after a year of ownership. Gold and silver assets that are sold after less than a year is deemed regular income and will be taxed at the investor’s normal rate.
If you’re interested in diversifying your financial portfolio with precious metals but aren’t sure how to get started, reach out to Steve’s Precious Metals in Redding, CA. Our trusted team of professionals will help explore your investment options and provide expert advice to guide you in the right direction. We carry a variety of bullion bars and coins and strive to offer customers competitive buying and selling prices. Call (530) 223-0170 to book a one-on-one appointment or visit our website for more information about the services we provide.