Taxes on Selling Physical Gold and Silver
When you sell physical gold or silver you own outright at a profit, the IRS generally treats the gain as a gain on a collectible. Long-term collectibles gains are taxed at a maximum federal rate of 28%, and short-term gains are taxed as ordinary income. Your taxable gain is the sale price minus your cost basis, so good purchase records directly affect what you owe.
Why Bullion Is Taxed as a Collectible
The tax code groups precious metals with art, antiques, stamps and similar items as "collectibles." IRS Topic No. 409, which covers capital gains and losses, lists collectibles gains as one of the categories that can be taxed at up to 28% instead of the lower long-term rates that apply to many stocks and funds. It does not matter whether you bought a widely traded bullion coin or a rare one; physical gold and silver held outside a retirement account generally fall into this category.
This is a maximum rate, not a flat rate. If your ordinary income tax bracket is lower than 28%, the gain is taxed at your lower bracket rate. If your bracket is higher, the gain is capped at 28%.
Short-Term vs Long-Term Holding Periods
The holding period starts the day after you acquire the metal and ends on the day you sell it.
- Held one year or less: short-term gain, taxed at your ordinary income rates.
- Held more than one year: long-term collectibles gain, taxed at your ordinary rate up to the 28% maximum.
If you buy metal in several lots over time, each lot has its own purchase date and cost. When you sell part of your holdings, being able to identify which lot you sold can change both the holding period and the gain. That is one reason buying on a regular schedule makes careful records more important, not less.
Working Out Your Cost Basis
Your basis is generally what you paid to acquire the metal, including the dealer premium and costs directly tied to the purchase, such as shipping charged on the order. On the sale side, costs of selling such as a dealer's commission or shipping you pay to deliver the metal generally reduce the amount realised.
A hypothetical example with round numbers chosen only to show the arithmetic (not actual market prices): you bought one ounce of gold for a total of 2,000 dollars including premium and shipping, and more than a year later you sell it for 2,600 dollars net of selling costs. The gain is 600 dollars, and it would be a long-term collectibles gain. The tax on it depends on your bracket, up to the 28% cap.
If you sell for less than your basis, you have a capital loss, which can generally offset other capital gains under the rules in Topic 409. Our guide to record-keeping for precious metals purchases covers which documents prove your basis.
Gifted and Inherited Metal Have Different Basis Rules
If someone gave you gold during their lifetime, you generally take over the donor's basis for figuring gain, so their purchase records matter to you. If you inherited it, the basis is generally the fair market value on the date of death. Those two rules can produce very different tax results on the same coin. See gifting gold and silver and precious metals and estate planning for more detail.
Metals Held Inside a Retirement Account
Everything above applies to metal you own directly. Gold and silver held in a self-directed IRA follow IRA tax rules instead. Selling metal inside the account does not create a capital gain at that time. Tax generally arises when money or metal is distributed: traditional IRA distributions are usually taxed as ordinary income, while qualified Roth distributions can be tax-free. Distributions taken before the IRS-defined age may also face an additional tax unless an exception applies.
Our page on how taxes work for metals held in an IRA covers this in more depth. Companies such as Goldco offer both direct purchases and metals for IRAs; the Goldco review describes how the two paths differ in practice. Goldco's precious metals specialists are not licensed to give tax advice, so tax questions belong with your own tax professional.
Reporting the Sale
Sales of collectibles are reported on your federal return using the capital gains forms, whether or not the dealer sends you an information return. Some dealer purchases of certain metals in certain quantities are reported to the IRS by the dealer, and large cash transactions have their own reporting rules. Our article on when precious metals sales get reported to the IRS explains both. Your obligation to report a gain exists either way.
Practical Steps Before You Sell
- Gather receipts showing the date, product, quantity and total cost of each lot.
- Decide which lots you are selling and note their holding periods.
- Get the buyer's written price and any deductions.
- Keep the sale confirmation with your purchase records.
- Ask a tax professional how state income tax and any other federal taxes apply to you.
For the mechanics of finding a buyer, see how to sell gold and silver.
Frequently Asked Questions
Is the 28% rate a flat tax on all gold profits?
No. It is the maximum federal rate for long-term collectibles gains. If your ordinary bracket is lower, the lower rate applies. Short-term gains are taxed at ordinary rates.
Do bullion coins with a face value get different treatment?
Legal tender bullion coins are generally treated like other precious metals for capital gains purposes, based on their sale price and your basis, not their face value.
What if I cannot find my purchase receipt?
Without proof of basis, you may struggle to support the cost you claim. Bank or card statements, dealer account histories and emails can help reconstruct it. A tax professional can advise on what is acceptable.
Does selling metal inside an IRA trigger the collectibles rate?
Generally no. Sales inside an IRA are not taxed at the time; taxation depends on distributions under IRA rules.