Bloomberg is out with a great story and reminder this week about how investors who sold bullion-backed gold ETFs and are sitting on capital gains could be surprised by higher tax rates than equities.
Gold is considered a “collectible” by the IRS, so gains on bullion ETFs held for over a year are taxed at a 28% rate. [Gold ETFs, the IRS and Tax Day: Not so Alluring]
Taxpayers pay a maximum rate of 20% on long-term gains for stock ETFs. The higher tax rate for gold ETFs may catch some investors by surprise since the exchange-listed products are bought and sold like individual stocks.
Other bullion-backed ETFs include iShares Gold Trust (IAU) and ETFS Physical Swiss Gold Shares (SGOL). [Lydon: Gold ETFs Shed 300 Tons of Bullion This Year]
GLD is the largest gold ETF with assets of $44.7 billion. The fund closed Tuesday with about 1,023 metric tons of gold, down from roughly 1,351 tons at the end of 2012.
The gold ETF is off 18% year to date.
“The ideal place to hold something like that is in an individual retirement account or other non-taxable account,” Padula said in the Bloomberg article. “That can save a lot of headaches.”
SPDR Gold Shares
Full disclosure: Tom Lydon’s clients own GLD.
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