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.
George Padula at Modera Wealth Management told Bloomberg that some clients are facing the tax issue because their previous advisors put SPDR Gold Shares (NYSEArca: GLD) in their taxable investment accounts.
Other bullion-backed ETFs include iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: 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.