Can I exchange an investment in gold coins?
Q: I purchased some rare gold coins in a collection about 10 years ago. Since that time, they have risen in value dramatically. Can I do an exchange on this type of asset to defer the tax that would be due if I sell the coins outright?
A: Yes, and given the higher 28% tax rate on gold and silver, it’s a great idea to consider. Gold- if held for investment or business purposes and not purchased for dealing or trading- can constitute qualified property. However, in order to meet the like-kind standard, the new gold must be purchased in the same form as the gold investment you relinquish. To comply with the exchange rules, you must exchange within the same narrow category.
For instance, your numismatic gold coins that are held for investment are not considered “like-kind” with bullion coins such as the US Gold Eagle, Canadian Gold Maple Leaf or South African Krugerrands. (Bullion coins are minted all around the world and traded based on the metal content; numismatic coins are traded based not only on the value of the gold, but on the intrinsic value of their size and rarity.) In order to craft a proper exchange, you would need to sell your coins and purchase other collectible numismatic coins.