People have been mining, saving, buying and selling gold for millennia, and as a physical store of value the shiny yellow metal still holds a strong appeal. The cost of storing gold should be a factor, of course, as should any sales taxes you may have to pay on the purchase and capital gains levies on the ultimate sale. It's useful to understand how these taxes -- one of them administered by your state, the other by the federal government -- function with respect to gold and other precious metals.
Study your state's sales tax law. Some states tax the purchase of precious metals, including gold, just as they do the purchase of a car, jewelry, a home or any other consumer good. If you buy from a dealer in another state via a website, the sales tax may not be due. In general, a website has to charge sales tax only to buyers in the state in which the website operator is based, only if the seller has a "nexus" (presence) in the state and only if that state levies taxes on online purchases. Some states exempt sales of monetized bullion -- i.e., gold coins -- on a single, large purchase.
Keep records of your gold transactions, including receipts with date and amount of the transaction. When you buy an asset such as physical gold, you've established a cost basis for federal tax purposes. At the time of the sale, the amount of your proceeds determines whether you have a capital gain or loss, which must be reported on Schedule D. Long-term capital gains taxes apply to those assets held more than a year; short-term gains to those held less than a year. Any transaction costs, such as commissions, are figured into the purchase as well as the sale. You will escape capital gains on the sale if you report proceeds equal to or less than the basis.
Shop for your gold in a foreign country that has low or no sales taxes on gold. Although the country of origin may levy export taxes, the United States does not levy duty on incoming gold coins, metal or bullion. You must complete the Treasury's FinCEN 105 form for any "monetary instrument" brought in -- including a gold coin collection -- that is valued at more than $10,000. Federal law bans gold imports from Cuba, Sudan, and Iran. Capital gains on the eventual sale, either within or outside the U.S., may also be due.
A handy tax loophole known as a Section 1031 exchange can allow you to defer any capital gains from your sale of gold. You must exchange the metal for something of like kind within 180 days of the date of your purchase. Check with a tax adviser or the IRS directly on the coins and bullion that would qualify for a like-kind transaction.
Transactions of more than $10,000 in cash or equivalents, such as money orders, must be reported to the federal government on Form 8300. You have to give your name, address and Social Security number; the seller files the form with the IRS. Splitting up cash payments won't work -- if the transaction exceeds $10,000, it's reportable.
- ThinkAdvisor: How Rare Coins Bring Tax Benefits
- GoldDealer.com: Reportable Bullion & Cash Transactions
- US Customs and Border Protection: Importing Gold Coins, Medals, and Bullion
- Reuters. "Tiny Bead From Bulgaria May be World's Oldest Gold Artifact." Accessed April 24, 2020.
- Federal Trade Commission Consumer Information. "Investing in Gold." Accessed April 24, 2020.
- Apmex. "Live Gold Price Charts and Historical Data." Accessed April 24, 2020.
- Yahoo! Finance. "Gold Jun 20 (GC=F) Historical Data." Accessed April 24, 2020.
- Yahoo! Finance. "Gold Jun 20 (GC=F)." Accessed April 24, 2020.
- Macrotrends. "Gold Prices - 100 Year Historical Chart." Accessed April 24, 2020.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.