When investing in bullion, there are many complications regarding taxes. While tax calculation on ETFs is very straightforward and simple, the same cannot be said for the purchase of physical silver and other precious metals.

Furthermore, the tax implications of buying and selling silver differ from each other, making the situation even more complicated.

When buying silver, you will be charged a sales tax, the amount of which depends on which state you live in. The purchase is reported with the IRS as well. This is fairly simple, but taxes on silver sold are quite complicated. In order to learn all that goes into the process of taxes in selling silver, keep reading.

Tax Implications of Selling Silver:

Regardless of the form in which you buy silver— coins or bullion—the holding is considered as a capital asset by the IRS. In the category of capital assets, they are specifically classified as collectibles.

The special thing about this is that the capital gains tax is not charged directly on sale, and only if the holding is held for more than a year. This tax is charged at the owner’s marginal tax rate, with a maximum of 28%. This means that if someone’s marginal tax rate falls under 30%, they’ll still be charged 28%.

The Cost Basis:

The tax charged on the sale of silver is calculated through the cost basis of the metal itself. The cost basis is the original value of an asset, such as its purchase price. This means if you’re selling the silver, the tax will be charged on the price that you bought it. So, if you subtract the cost basis from the current market value of silver, you get your capital gain.

In different situations, however, the cost basis differs, which in turn means the amount of tax charged differs. For instance, if you’re gifted silver, the cost basis is calculated on the market value of silver at the time that the gift was purchased.

But, if the market value has fallen since they purchased it for you, then the cost basis is charged on the market value at the time you receive it. And if you inherit silver, the cost basis is calculated on the market value at the time of the previous owner’s demise.

In this way, the taxes on silver differ situationally, so it’s very important to check market values and tax percentages before you invest in it.

Where to Buy Silver

For the top silver IRA companies, Orion Metal Exchange is the place to go. We also have silver bullion bars and the answers to all of your precious metals related concerns. Visit our website to learn more about our services.