CGT on Gold Sale

CGT on Gold SaleBefore you buy any physical precious metals, you need to take into consideration potential capital gains tax on gold bullion sale once you decide to sell your bullion bars or coins. If you have owned your physical gold for over year before deciding to sell it, beware that your precious metals sale is going to be treated as collectibles and taxed at a higher tax bracket.

The sale of any asset in the eyes of the Internal Revenue Service is subject to CGT, including various forms of precious metals investing mechanisms. It makes no difference to the IRS whether you decided to sell your physical bullion, a few gold coins or shares in gold exchange traded funds, you are going to pay very high CGT on gold sale all the way up to 28%. Unfortunately, investing in any kind of physical precious metals or shares of ETF’s is not treated as an investment in the eyes of the IRS and does fall into the “collectible” tax bracket along with art, antique furniture, objects and gemstones.

With any other type of investment like with common stocks, for example, you only have to pay 15% of capital gains tax but your CGT on gold sale will be as high as 28% if you decide to sell it after you have owned it for more than one year’s term. Normally, CGT on gold sale is classified as a short term (less than a year) or long term (over a year) investment and is subject to capital gains tax varying from 15% to 28% depending on this factor. For example, if you’ve held your coins or bullion for less than a year, you are subject to CGT at a normal capital gains rate of 15% and if this term is over a year since the day of purchase, it goes up to a maximum rate of 28%.

Knowing how high CGT on gold sale rate is can make any type of precious metals investment unattractive and take the gold rush out of any investor. In addition, if you add up your actual gains, especially with a rather hefty gold bullion price today and subtract any gold ETF management fees or bullion storage and insurance fees, does your gold truly shine that brightly? At this point the best piece of advice is to account for CGT on gold sale before making any investment decisions.