Gold Investments and Taxes

Tax Implications for Gold Sales

If you sell gold bars, coins, or gold-backed investments, any increase in value from the purchase price is considered taxable income when you sell.

Short-term Capital Gains Tax on Physical Gold

Selling gold within a year of purchasing it results in short-term capital gains, which are taxed at the investor’s ordinary income tax rate. This can be as high as 37 percent, depending on your income tax bracket.

Taxing Gold ETFs and Gold Stocks

Investors who own gold ETFs or stocks in gold-adjacent businesses, such as mining companies, face different tax rules. Gold stocks are subject to traditional capital gains tax rates depending on how long you own them before selling.

Taxing Gold as a Collectible

The IRS classifies gold as a collectible in certain situations, resulting in a higher tax burden. This can apply to gold coins, bars, and other collectible items. Investors can still avoid capital gains tax on gold by holding onto it indefinitely or using strategies like tax-loss harvesting.

Strategies to Minimize Capital Gains Tax

There are several strategies to minimize capital gains tax on gold sales, including:
* Holding gold for over a year to qualify for long-term capital gains tax rates
* Deducting storage or insurance costs from your cost basis
* Using a gold IRA to shield gold from capital gains tax
* Practicing tax-loss harvesting to offset gains from gold sales
Long-term Capital Gains Tax on Physical Gold
When you hold physical gold for a year or longer, it doesn’t necessarily qualify for the lower long-term capital gains tax rates that apply to stocks, bonds, and mutual funds. Instead, it’s considered a collectible and may be taxed at a higher rate. Collectibles Tax Rates
The collectibles tax rate applies to gold coins, bars, and other collectible items. This rate can range from 15 percent to 28 percent, depending on your tax bracket. Tax-Deferred Retirement Accounts for Gold
Investing in a gold IRA allows for deferred or tax-free growth, depending on the account type. With a traditional gold IRA, taxes are deferred until withdrawals begin in retirement, at which point distributions are taxed as ordinary income. Editorial Disclaimer All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. For expert guidance to understand the tax implications of your investments or build a balanced portfolio, Bankrate’s AdvisorMatch can connect you to a CFP^® professional to help you achieve your financial goals.