First, you can postpone your tax bill with a 1031 change. This means that you reinvest the money from your gold sale by buying more gold and, if you meet the IRS requirements, all of these transactions will not be taxable. How to avoid metal sales tax So how can you, as a tax-paying precious metals owner, avoid paying more than necessary in sales taxes for your metal purchases? The simple answer is to store your metals overseas or in one of five states that currently do not charge sales taxes. Alternatively, you can also consider a Gold IRA rollovers guide to help you understand the process of investing in gold through an IRA.
The best way to avoid this is to invest in funds and assets that don't buy physical gold. A particularly good approach is to look for ETFs and mutual funds that specify this approach in their investments. Assets, such as futures contracts and options, are not considered investments in physical assets, so the IRS treats them as ordinary capital gains with a maximum rate of 20%. 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.
Whether or not you must pay sales tax for a purchase of precious metals depends on your location. Some states require the collection of sales tax, while others do not. Some states may also charge sales taxes to a certain extent, and there may be exemptions beyond that point. And since gold is an investment asset, when you sell your gold and make a profit, it's taxed as capital gains.
