How to Sell Gold Without Paying Taxes: Is It Possible to Avoid Tax on Gold?

How to sell gold without paying taxes? This is a common question we get here at Gold Galore Jewelers, and it’s an excellent one. The IRS does its job well, but naturally, you want to get the most cash for your gold and hopefully not lose a dime on the sale.

Gold is a terrific investment, and one of the safest and most profitable ones you can make. On the other hand, the tax rules around precious metals like gold and silver can get pretty complicated. Add the many ways you can buy or sell gold (as jewelry, in bullion form, coins, gold bars, etc.), and the complexity goes up even more. 

In this post, we’ll try to answer some of the common questions around how taxes work around selling gold, such as:

  • Do I have to pay taxes if I sell gold?
  • How do I avoid capital gains tax on gold?
  • Are gold transactions reported to the IRS?
  • How much gold can I sell without reporting?

Before we start, however, we’d like to be clear– we’re not providing tax advice here, just sharing some general information. 

We try to be accurate but we can’t guarantee that everything in this article is perfect and up-to-date (since laws change) or covers every individual case. Taxes are complex, so always consult a CPA and/or an attorney if there’s anything unclear about yours to avoid issues with the IRS.

With that said, let’s get started.

Is Gold Taxable?

Yes. Gold is considered a collectible by the IRS similar to art or antiques and is taxable in the same way.

This refers to investment-grade gold, such as:

  • Gold commemorative coins
  • Gold in round, flat shapes
  • Any and all denominations of bullion coins
  • Numismatic gold coins, bars, wafers, etc.

When it comes to selling your gold, think of the IRS a little bit like an art collector. The more rare and valuable your piece of artwork, the higher its tax value will be–and this counts for precious metals as well! 

In other words, gold coins are subject to taxation based on their total value rather than just weighing how much gold they’re made with. 

Do I have to pay taxes if I sell gold?

In general, you have to pay tax when you sell gold if you make a profit. According to the IRS,  precious metals like gold and silver are considered capital assets with financial gain from their sale seen as taxable income.

Earnings from the sale of gold jewelry are classified in this way because they’re treated similarly to other valuable personal property and can be easily sold off for cash. Because of this, you’ll pay tax based on the capital gain you’ll get when you sell your gold.

In this case, capital gain refers to an increase in your gold item’s value. A capital gain may be short-term (one year or less) or long-term (longer than one year), but it is usually considered as realized when the property is sold and then must be claimed on your income tax.

How to calculate the tax you owe when you sell gold

Take what an item’s worth today at the current fair market value (FMV) minus the price for which it was originally purchased. If your gift, inheritance, or some other source then that will be used as a starting point and adjusted by any gain/loss in its value, from time of purchase until date sold. 

Here’s an illustration:

For example, if you paid $100 for a gold chain but later sell it for $200. Capital gains would equal 100 dollars so all told, capital gains taxes owed are $28.

On the other hand, when you inherit or receive gold jewelry as a gift, the fair market value becomes your cost basis. For example: when someone gives you 3 rings and 2 necklaces that have an FMV of $2,000 at the time they were given to you—you get no income from this transaction because it was sold for less than its original FMV price. Therefore, you don’t have to pay any tax on this transaction.

Are gold transactions reported to the IRS?

Yes, you generally need to report gold transactions to the IRS. However, tax liabilities on the sale of precious metals like gold and silver are not due the instant that they’re sold. Instead, sales of physical gold or silver need to be reported on Schedule D of Form 1040 at your next tax return.

Specifically, the Schedule D form is what most people use to report capital gains and losses that result from the sale or trade of certain property during the year. This includes things like stocks, bonds, real estate investment trusts (REITs), and collectibles like gold.

It also depends on how much gold you’re selling and what kind.

If you sell gold or silver coins for more than $1,000 worth in one year then Form 1099-B needs to be submitted at the time of sale. 

Items that require this filing include U.S 90% Silver Dimes ($1000 face value), and more than 25 pieces of one-ounce coins of Gold Maple Leaf, Gold Krugerrand, and gold Mexican onza coins. This includes coins and bars measuring 1 kilogram or 1000 troy ounces in weight respectively, along with any gold or silver item that has more than 50% pure gold or silver content.

Form 1099-B is a form used by individuals who have sold an asset valued greater than $1000 which contains metal (including rare metals like gold, silver, and platinum). The person selling such assets is required under tax law to file said document within 30 days of the sale.

How do I avoid capital gains taxes on precious metals like gold and silver?

There are a couple of ways to sell gold without paying taxes or at least defer the payment.

Use a 1031 Exchange

First, you can postpone your tax bill with a 1031 exchange. This means that you reinvest money from your gold sale by buying more gold, and if you meet the IRS requirements, then all of these transactions will not be taxed. You only pay the taxes when you actually sell your gold for cash, not when you buy more gold with the money.

Self-Directed Roth Retirement Accounts

You can use your retirement account to sell gold without getting taxed but you have to be careful. You’ll want a self-directed IRA, SEP-IRA or 401K plan in order for this method of investment to work best. Make sure not to touch the physical gold as well, otherwise it will be subject to capital gains tax.

Selling gold through Roth accounts is a great option because the value of assets grows without any taxation if used with Roth accounts. Therefore, all taxes will be applied just from real estate profits within these funds (that is assuming they have been set up appropriately).

Do note that this method has a few strict rules. For one, it has to be pure gold, such as Gold Mexican Onza coins and Maple leaf gold, not Krugerrands. Be careful with how you operate the account as well. For instance, avoid lending money to yourself or any dependent, underwise you may come under IRS scrutiny.

How much gold can I sell without reporting?

As we mentioned earlier, there are certain types of gold and specific amounts that are required to be reported when you sell them. The following don’t fall under reporting requirements:

  • Fewer than 25 pieces of 1-oz Gold Maple Leafs, 1-oz Mexican Onzas, and 1-oz Krugerrands in a single transaction
  • American Gold Eagles, regardless of quantity
  • Any fractional ounce gold coins
  • Gold jewelry under certain classifications

Not sure what classification your gold item falls under? We invite you to bring them here at Gold Galore, and we’ll help you identify both their classification and what kind of taxes you may be looking at (if any at all).

More FAQs About Gold and Tax Implications

Why are some products exempt from reporting?

This is because some gold items do not meet the minimum purity composition to be considered reportable.

Why do I need to report my gold sales anyway?

One reason is that these reports are designed by the IRS to monitor individual sellers who may be selling items as a source of income, in order to prevent potential tax evasion.

Will Gold Galore Jewelers give out my information?

There are certain gold transactions we are required to report to the IRS as a dealer. However, we will never give out any of your information in our tax reports, for reasons beyond what the IRS requires. At no point will any third party gain any access to your personal data through Gold Galore Jewelers.

Enjoy Safe Gold Transactions with Gold Galore Jewelers!

As a reputable gold dealer, our precious metal purchase and sale policies adhere to IRS regulations. When you buy or sell gold or silver with Gold Galore Jewelers, we guarantee that the transaction will be conducted according to federal tax laws in order for us both (you as a buyer and us as the dealer) to stay on the right side of the law. 

Again, please note that this article is not intended as financial advice—we encourage customers who need more specific information about their individual situation to consult with an accountant for help.

To help you get started however, we encourage you to drop by our shop to talk to one of our staff. We are well-informed about Florida’s tax laws about selling gold, and we’d love to answer your questions.

And when you finally feel confident about selling your gold, we’d be happy to buy them from you!

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