Precious Metals Investment Tax Rates

July 1, 2009

Gains from the sale of investments in precious metals are currently subject to a tax rate of 28%. This compares to the current long term capital gains rate of 15%, which applies to other investment classes such as stocks and bonds. A bill has been introduced which seeks to tax precious metals investors at the same preferential rates afforded to other investors.

Precious metals investments are considered “collectibles” under the current tax code. Gold, silver, and other precious metals are lumped into the same classification as works of art, rugs, antiques, and stamps. The tax rate for “collectibles gains” is currently 28% regardless of whether the assets were held for more than one year.

The classification as collectibles comes from the section of the Tax Code which describes the capital gains tax rates which apply to different asset classes. This section references a definition of collectibles found in another section of the code, which interestingly provides an exception for certain precious metals. This exception is curiously disregarded for the purposes of capital gains taxation.

The bill S. 1367 Fair Treatment for Precious Metals Investors Act seeks to rectify the disadvantageous tax rates imposed on precious metals investors. The bill would amend the Tax Code to preserve the exception created for certain coins and bullion. After the amendment, common precious metals investments such as American Eagle bullion coins would no longer be classified as “collectibles” and would be eligible for lower long term capital gains rates.

In order to become law, the bill would need to be approved in the House of Representatives, the Senate, and signed by the President. A similar bill was introduced in 2007, but it never gained the support necessary to become law. You can following the progress of the current bill on GovTrack.

Comments

By pdx1138 on July 5th, 2009 at 10:10 pm

I’m sure there are many collectors out there that were unaware of this unfair tax balance. Thanks for the tip! I hope they do the right thing and even it out.

By Larry on February 4th, 2011 at 5:29 pm

where is the definitive list of precious metals? Wikkipedia says aluminum is precious metal

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