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Gold and taxes: What every investor needs to know
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If you bought gold earlier this year, then you’ve probably seen some big returns. The price of gold has risen steadily in 2024, even hitting record highs multiple times.
Forecasts say they could rise further, too. And while that’s great for your portfolio, it also has some tax implications you’ll want to prepare for.
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Gold and taxes: What every investor needs to know
Do you have gold investments that have seen gains this year? Here’s what to know about the taxes you might owe as a result.
Capital gains taxes
If you sold any of your gold investments for a profit this year — including gold stocks or shares of a gold ETF — you’re going to owe capital gains taxes on those returns.
“The tax bill is based on the amount of gain,” says Matthew Chancey, a certified financial planner and founder of Tax Alpha Companies.
Depending on your income, you’ll owe a capital gains tax of 0% to 20% on the profits if you held the asset for more than 12 months. If it’s less than 12 months, you’ll be taxed based on your ordinary tax bracket (though the gains could push you into a higher bracket in some cases).
Find out more about gold investing here.
Collectibles taxes
If you sold physical gold assets — like gold coins, for instance — the tax bill could be even higher.
“That’s considered a collectible and is taxed at a higher rate,” Chancey says. “Instead of a long-term capital gains tax at 20%, it would be taxed at the collectibles rate of 28%. So, if you invested $100,000 into the physical metals and the value is now $200,000, you would pay $28,000 in taxes if you held the metals for longer than 12 months.”
One other catch? Collectible taxes are tallied up before capital gains, so if you have too much profit there, it could lead to higher taxes on other profits, too.
“One easy-to-miss tax issue is the order of operations for taxing collectibles,” says Matthew Argyle, a certified financial planner and owner of Encore Retirement Planning. “Simply put, ordinary income is considered first, then collectibles, and last, capital gains. This means that gains from collectibles may increase the tax rate on your regular capital gains.”
Investment taxes
If you make over $200,000 as a single tax filer, $250,000 if you’re married and file jointly, or $125,000 if you’re married and file solo, then you’ll face another tax on any income you earn from your gold investments: The net investment income tax (NIIT).
“If you qualify for the Net Investment Income Tax, you could owe nearly 12% more to the IRS,” says Argyle. “Additionally, you may face state and local taxes, which could bring your total tax rate to as high as 54% — 37.6% in federal income tax, plus 3.8% in net investment income tax, plus 12.3% in state taxes.”
How to reduce your gold taxes
While you can’t legally avoid paying taxes on your investment income, there are ways to mitigate the damage they do to your bottom line. For one, you can do what’s called “tax loss harvesting,” in which you recognize losses in other investments to make up for the gains in others.
“For gold held in taxable accounts, the concept of tax loss harvesting in the overall portfolio could apply,” says Rob Burnette, CEO of Outlook Financial Center. “Using losses to offset gains is a normal process used in taxable accounts to help mitigate taxes.”
Another option is to use the gains you earned toward a new investment.
“You could also consider reinvesting those gains from metals in real estate — into a qualified opportunity zone fund to help mitigate the sting of the taxes,” Chancey says.
These are both after-the-fact approaches, though. If you’re proactive enough, you could reduce taxes from the start. For one, you can just avoid selling the gold altogether. Hold onto it longer, and allow it to keep appreciating.
“As long as nothing is sold, there are no taxable events,” says Michael Chadwick, president of Fiscal Wisdom Wealth Management.
Another option is to hold your gold investments in a gold IRA, which Argyle calls a “major loophole.”
“Doing so will avoid the ‘collectible’ classification and allows gold to enjoy the same tax rules as other IRA assets,” Argyle says. Just proceed with caution: “Serious issues arise if you buy the wrong type of gold for your IRA or store it improperly.”
The bottom line
At the end of the day, you’re best off talking to both an investment and tax professional if you’re going to invest in gold. They can help you choose the best investments, as well as prepare for the tax implications that might come with those.
“Contact an expert in this field,” says Eric Elkins, CEO of Double E Financial Solutions. “If your financial advisor isn’t savvy on the best gold investments, then ask them to help you find an expert who is. You wouldn’t have knee surgery from your dermatologist, so don’t make the same mistake with your financial well-being.”
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If you’re looking for an inexpensive way to access a large sum of money right now, you’d be hard-pressed to find a better alternative than a home equity line of credit (HELOC).
Compared to personal loans and credit cards, HELOC interest rates are many points lower (the average credit card rate now is nearly triple what a HELOC rate is). Unlike some other borrowing options, home equity loans and HELOCs also provide access to a substantial amount of funding. Right now, the average homeowner has around $330,000 worth of equity to tap into. And HELOC interest rates are variable, meaning that they’re well-positioned to decline as additional interest rate cuts are issued.
So, if you’re thinking a HELOC is your best way to access extra financing currently, you’re likely not wrong. To confirm this speculation, however, it’s critical to carefully calculate your potential monthly costs. No matter whether you’re looking to borrow $100,000 with a HELOC or just $30,000, you must understand your payments. But, how much does a $30,000 HELOC cost monthly now that rates are falling? That’s what we’ll calculate below.
See how low of a HELOC interest rate you could secure here.
How much does a $30,000 HELOC cost monthly now that rates are falling?
When calculating HELOC monthly payments it’s important to remember that these are just estimates. After all, variable interest rates are exactly that – variable. For HELOCs, borrowers can expect them to change monthly. But while that may have been an issue in recent years as rate hikes were continuous, it’s a timely benefit now in the face of what may be an extended rate-cutting campaign. Here, then, is what a $30,000 HELOC could cost monthly now, tied to two common repayment periods and the assumption that the rate will remain static:
- 10-year HELOC at 8.69%: $375.01 per month
- 15-year HELOC at 8.69%: $298.77 per month
So while you’ll save more each month by going with the longer option, you’ll pay more in interest to do so. But remember that these payments are only approximated. Here, then, is what they could become if rates fall by 25 basis points in November:
- 10-year HELOC at 8.44%: $371.00 per month
- 15-year HELOC at 8.44%: $294.37 per month
That noted, HELOC interest rates are unlikely to fall by the same precise amount that the federal funds rate does. So calculate on the assumption that it does, but understand that they don’t move by the same amount each month.
Get started with a low-rate HELOC online now.
Don’t forget about your credit score
Remember that the interest rates you see listed on lender websites are as low as they are on the assumption that borrowers are qualified – meaning that they have a high credit score and clean credit background. If you don’t have both, you won’t be eligible for the above rates and may have to pay significantly more, depending on your financial circumstances. If you have a low score – and can afford to delay the needs you were planning to cover with a HELOC – it may be worth improving your credit before applying. So, don’t apply for other credit in the interim, pay down (or off) all of your current debts and make sure to pay your current monthly payments on time (or, preferably, early).
The bottom line
A $30,000 HELOC comes with monthly payments between $299 and $375, approximately, right now. But those rates will change over the life of the line of credit. And you won’t be eligible for the best rates and terms if you don’t have a good credit score, so make sure to check that before applying. Finally, remember that your home is collateral in any home equity borrowing exchange, therefore it’s critical that you withdraw only an amount that you can afford to pay back or you’ll risk losing your home in the process.
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Parents of Utah woman accused of killing husband arrested for allegedly cleaning up crime scene
The parents of a Utah woman accused of killing her husband were arrested for allegedly cleaning up the crime scene, according to Salt Lake City jail records.
Thomas Ray Gledhill, 71, and Rosalie Christianson Gledhill, 67, were taken into custody Thursday. Both were booked into Salt Lake County jail, according to inmate records, on obstruction of justice charges.
Their daughter Jennifer Gledhill, 41, of Cottonwood Heights, was arrested earlier this month after she told a police informant she shot her husband on the bed, buried his body and removed items from the house and destroyed them to cover up the crime. She is being held in jail on murder and other various charges.
Investigators found a bloodstain on the carpet under the bed and blood on the bed frame. CBS affiliate KUTV reported investigators said, “significant clean up had taken place after this crime had occurred, including bleaching walls, and using carpet cleaning supplies.”
Investigators said in a probable cause statement that the mother bought the mattress to replace the one where they believed the husband was killed, KUTV reported.
They also said that Gledhill called her father while on her way to bury the body. The father told police he was at the home for less than an hour, but neighbors reported seeing him there for more than five hours.
Gledhill and her husband former National Guardsman Matthew Johnson, 51, were going through a contentious divorce and a custody dispute involving their three children, according to court records, the Associated Press reported.