Holdings in precious metals such as gold, silver or platinum are considered capital assets and therefore capital gains may apply. When it comes to taxes, the IRS classifies precious metals as collectibles and therefore may be taxed at the maximum rate of capital gains raising of 28 percent. The Internal Revenue Service (IRS) considers physical holds of precious metals such as gold, silver, platinum, palladium and titanium to be capital assets specifically classified as collectibles. Holdings of these metals, regardless of their shape, such as bullion coins, ingot ingots, rare coins or ingots, are subject to capital gains tax.
It is important to be aware of potential Gold IRA scams when investing in gold and other precious metals. Capital gains tax is only due after the sale of such shares and if the shares were held for more than one year. By Ed Coyne, Senior General Manager of Global Sales This is the case not only for gold coins and bullion, but also for most ETFs (exchange-traded funds), which are subject to 28% taxes. Many investors, including financial advisors, have trouble owning these investments. 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%.
Investors often perceive the high costs of owning gold as profit margins and storage fees for physical gold, 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.
Since 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 by selling or repaying their units. Again, these rates are 15% or 20%, depending on revenue, for units held for more than a year at the time of sale. To be eligible, investors or their financial advisors must choose a qualified electoral fund (QEF) for each trust by completing IRS Form 8621 and filing it with their U.S.
UU. While no investor likes to fill out additional tax forms, the tax savings of owning gold through one of Sprott's physical ingot trusts and participating in annual elections can be worth it. Investors always want to consider the total cost of ownership when weighing different precious metal investment options. That said, given that investors can save a lot on taxes, considering PFICs like Sprott Physical Bullion Trusts makes sense, especially when prices are trending upwards.
To learn more about Sprott Physical Bullion Trusts, ask your financial advisor or Sprott representative for more information. Sprott Asset Management LP is the investment manager of the Sprott Physical Bullion Trusts (the “trusts”). The prospectus contains important information about trusts, including investment objectives and strategies, purchasing options, applicable management fees, and expenses. Read the prospectus carefully before investing.
Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. This communication does not constitute an offer to sell or a request to purchase securities from the Trusts. This price difference between the starting price of the precious metal and its final selling price is considered capital gain. There, any such benefit is subject to capital gains tax.
And since gold is an investment asset, when you sell your gold and make a profit, it's taxed as capital gains. .