When determining the total cost of your gold coin purchase, don’t forget to consider the sales taxes. In some cases, your bullion purchase will be subject to sales tax – adding a significant amount to your bottom line. However, with careful planning it may be possible to avoid paying sales tax on your coins and gold bullion.
Sales Tax Laws
First, it is important to understand your state’s sales tax laws. Sales tax laws vary from state to state. Some states tax purchases of gold coins and bullion, while others exempt precious metals and coins (or certain, specified types of these products) from the tax. Sales tax laws can be complex, and vary significantly depending on the state in which you live. The first step to tax-free coin investing is to determine whether your state charges sales tax on the precious metals you wish to purchase.
Sales Tax Exemptions
Some states do exempt purchases of a certain size – such as $1,000 or $5,000 – from sales tax requirements. While this rule makes it possible to avoid paying taxes by buying in bulk, this can be cost-prohibitive for smaller investors. In addition, not all states that tax precious metals offer such exemptions, instead taxing coins regardless of the size of the purchase.
What if you live in a state that taxes precious metals? The thought of paying sales tax on gold coin purchases certainly seems to eat into the potential profits. However, there are ways to avoid paying this tax. Although it may seem like everything is taxed these days, it is still possible to buy gold coins and bullion without paying sales tax, even if you live in a state that does not exempt these purchases from the sales tax requirement.
Buying Online to Avoid Taxes
Buying online can be an excellent way to avoid paying sales tax on your bullion purchases. Purchasing from out-of-state dealers is another way to find tax-free gold coins. The seller’s home state determines whether they must collect sales taxes. Most online gold dealers are headquartered in states that do not charge sales taxes on the purchase of gold coins or bullion, making purchases from such sites free from sales taxes.
Although you may have to pay shipping costs when buying online, this is more than offset by the significant tax savings. Purchasing from online dealers also comes with other benefits, such as a larger selection and more competitive pricing than you’ll find at most local coin dealers. Often, buying online means getting the best deals on the best gold coins – and this is especially true if you live in a state where coins and bullion are taxed.
Depending on your local sales tax rate, buying from an out of state or online dealer can mean a savings of as much as 9% of the cost of the coins. Given the cost of precious metals, this can mean a significant monetary benefit to buying online. Why spend your money on sales tax, when you could be investing it in more gold? Knowing that you can purchase gold bullion online to avoid sales tax can make a big difference to your own investment situation.