The beauty and rarity of gold has made it an attractive asset for investors for centuries. However, owning gold in physical form also comes with some responsibilities. One of these is being aware of any possible tax liabilities. As far as being able to write off gold purchases, whether or not you can do this depends on the circumstances involved. Gold is usually bought in the form of bars, ingots, or gold coins. Carlsbad collectors who aren’t sure about whether they can write off gold purchases should keep reading to find out what they need to know.
If You Only Purchased Physical Gold, It’s Not a Write-Off
Whether or not any related write-offs may apply to gold purchases depends on what you did after you bought your gold during the most recent tax year. For instance, if you just bought some gold bars and coins and stored them away, this isn’t a valid write-off. But if you sold some of the gold you bought and experienced a loss as a result of doing so, you then have a valid write-off. How much this affects your overall taxes depends on some other factors.
Reporting Losses Related to Your Gold Activities
For tax purposes, the Internal Revenue Service considers gold a “collectible,” which also applies to other precious metals. Gains on gold purchases held for less than a year are considered taxable income. Therefore, if you sold some of your physical gold during the applicable tax year and made a profit doing so, you would need to pay the appropriate capital gains tax.
On the other side of things, the IRS allows you to report capital losses. This is done on Schedule D, which is included with a standard tax form. In this case, you would technically be able to write off a gold purchase if you lost money when you sold what you bought. If you end up with a net capital loss after calculating your capital gains and losses, this information is transferred to the 1040 return and considered an overall loss.
Write-Off Limits for Losses
According to PocketSense, there are some limits on the amount of losses related to gold transactions you can write off. The maximum amount of loss the IRS allows you to apply to your taxable income with regard to precious metals is $3,000. If you lost more than this amount on gold you bought and then sold, the remaining losses beyond $3,000 can be carried over to the next tax year. In this instance, the remaining losses would be used against any capital gains from the next tax year.
Get Personalized Advice from a Tax or Investment Professional
Because of the many unique factors that apply to anything involving taxes and precious metals, it can be beneficial to seek professional assistance. In this case, that would be a tax expert or an investment professional familiar with gold and other precious metals. This is also a good way to get advice about ways you may be able to limit tax liabilities associated with gold purchases.
If you’re interested in buying gold bullion or you’re looking for the best place to sell gold in Carlsbad, make sure to work with trustworthy precious metal dealers who offer high-quality service and have years of experience. Call on the industry-leading professionals at First National Bullion when you’re ready to buy or sell precious metals, including gold, silver, platinum, and palladium. Give us a call today at (760) 253-8072.
The statements made in this blog are opinions, and past performance is not indicative of future returns. Precious metals, like all investments, carry risk. Precious metals and coins may appreciate, depreciate, or stay the same in cash value depending on a variety of factors. First National Bullion does not guarantee, and its website and employees make no representation, that any metals for sale will appreciate sufficiently to earn the customers a profit. The decision to buy, sell, or borrow precious metals and which precious metals to purchase, borrow, or sell are made at the customer’s sole discretion.