Do I Have to Pay Tax on Gold Bullion?

Gold bullion is subject to various tax considerations within the United States. Its acquisition and disposition involve specific tax rules. Understanding these tax implications is important. The type of tax incurred depends on whether the gold is being purchased or sold, and the duration of its ownership.

Taxation at the Time of Purchase

When acquiring gold bullion, sales tax is a key consideration. Its application varies significantly across jurisdictions. Some states exempt gold bullion purchases from sales tax entirely. Other states may impose sales tax, or provide exemptions only when the purchase exceeds a certain monetary threshold.

Some states do not levy sales tax on gold bullion if it meets specific purity standards. Sales tax might apply to smaller transactions, collectible coins, or items where value extends beyond the metal content. Local jurisdictions may also impose additional sales taxes, further varying the total rate.

Taxation at the Time of Sale

When gold bullion is sold for a profit, it is subject to capital gains tax. The IRS classifies gold as a “collectible.” This classification impacts the tax rate applied to long-term gains, which differs from other investments.

Long-term capital gains arise when gold bullion is held for more than one year. For these gains, the maximum tax rate is 28%. This rate applies regardless of an individual’s ordinary income tax bracket. If an individual’s ordinary income tax rate is below 28%, their long-term capital gains on collectibles will be taxed at that lower rate.

If gold bullion is held for one year or less, any gain is a short-term capital gain. Short-term capital gains are taxed at an individual’s ordinary income tax rate. Calculating the capital gain involves subtracting the adjusted cost basis from the selling price. The cost basis includes the original purchase price plus any associated costs.

Reporting Gold Bullion Sales to the IRS

Certain gold bullion sales must be reported to the IRS by the broker or dealer. This reporting occurs on IRS Form 1099-B if specific thresholds are met. For gold bars or rounds, reporting is required if the sale involves 1 kilo or more, with a minimum fineness of .995.

Specific gold coins are also subject to reporting thresholds. Sales of 25 or more 1-ounce Gold Maple Leaf, Gold Krugerrand, or Gold Mexican Onza coins trigger a Form 1099-B. This form informs the IRS of the gross proceeds from the sale, allowing the agency to track potential taxable gains.

Individuals who sell gold bullion are responsible for reporting capital gains or losses. This requires record-keeping of purchase and sale details. This information is used to complete Form 8949 and Schedule D. Even if a dealer does not issue a Form 1099-B, the seller remains obligated to report any gain.