Is There Sales Tax on Gold and Silver in California?
BullionStar makes shopping precious metals easy in California without sales tax charges; however, any profits when selling your bullion may require capital gains tax to be paid on its sale.
States that impose sales taxes on bullion create an unfair competitive disadvantage among neighboring states that do not impose such taxes, harming both metal brokers and coin conventions alike.
Taxes on Precious Metals
Many states impose sales taxes on certain precious metal products, including gold and silver. These sales taxes are often charged directly to the final consumer rather than being collected from dealers or online retailers, punishing people seeking prudent investments as part of their long-term savings strategy while at the same time serving as a hedge against market fluctuations and economic instability.
State governments are starting to recognize this reality and are taking steps to liberate precious metals from bureaucratic restrictions. Mississippi recently took a significant step in this regard by officially ending this anti-sound-money practice.
Even in states that impose sales taxes, there may be exemptions for specific purchases. It is always a good idea to consult a certified tax professional for more guidance and information. If you sell precious metals at a profit, any capital gains must be reported as part of your annual filing.
Gold and silver investments have increasingly become a go-to investment strategy among investors who wish to protect themselves against market fluctuations and economic instability. But unlike investing in any other stock or bond, purchasing precious metals requires special consideration due to IRS taxes imposed on any long-term capital gains returns from precious metal investments at capital gains rates.
To combat this trend, some states are beginning to eliminate sales taxes on bullion and coins. Mississippi bureaucrats recently stopped charging sales tax for gold, silver and platinum coins, bars and rounds sold within their state’s boundaries.
Other states are taking steps to reform how they handle precious metals. Tennessee lawmakers, for example, want state pension funds to invest up to 40% of their assets in physical precious metals such as gold and silver – helping millions of retirees protect their retirement income and also eliminate sales tax on such precious assets.
Taxes on Bullion
Investors must also be mindful of capital gains taxes when selling precious metals. Any time you sell physical assets, such as coins and bullion, the difference between its sale price and cost basis must be subject to capital gains taxes; this includes their resale value.
Capital gains taxes exist to encourage individuals to invest in long-term assets like precious metals and reap their potential profits in due course. Although this policy can be beneficial, it may prove counterproductive for investors purchasing physical assets on a smaller scale.
Buyers must also remain mindful of sales tax laws in their state of residence. While each state sets a basic rate, cities and counties sometimes tack on extra points that reduce profits significantly.
Taxes on Coins
Before purchasing precious metals, be sure to verify all applicable rules pertaining to local, county and state rules in order to understand the full picture. A state may not levy sales tax; however, some cities and counties might add their own. Therefore it’s advisable to research all applicable rules as soon as possible.
Coins are considered collectibles rather than investments. Therefore, most states impose different tax rates for coins than for bullion investments. Furthermore, many coin dealers sell coins at a profit and therefore must pay taxes on any resulting profits they accrue.
California, Vermont, New Jersey, Maine, Tennessee, Kentucky and Wisconsin all impose sales taxes on most bullion products; however they provide exemptions for monetized or non-monetized gold and silver bullion purchased for less than $2,000. California also has a special rule to account for collector’s items; although this move acknowledges constitutional money it still acts as a regressive tax, taxing poor people more heavily.
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