From Tom Dyson and Grant Wasylik in The Palm Beach Letter: You can turn your precious-metals loss into immediate tax savings, without—technically—losing possession of the metals…
Regular Daily readers know we’d never consider selling gold or silver outright. This type of wealth insurance—called “chaos hedges” in our asset allocation model—is a Palm Beach staple.
It stores value—in liquid form—for potential financial crises we hope we’ll never have.
But if your gold or silver coins have fallen in value, you’re in luck. We uncovered a tax move that allows you to benefit from falling gold prices, without losing your gold…
IRS Code 1091 is known as the “wash-sale rule.”
It prohibits the repurchase of a security you sell for 31 days. If you want to claim a loss on the sale of a security, you cannot buy a “substantially identical” security within 30 days. The rule applies to stocks, bonds, options, funds, etc.
But the rule doesn’t mention precious metals. They’re not subject to a holding period for tax-swap sales.
Here’s how it works:
Let’s say you own gold coins purchased for $1,500 per ounce…
You go to a trusted coin dealer… sell them at current market price (about $1,150 per ounce)… then buy them back for the same price.
You realize a taxable loss in the transaction (which will lower your 2015 tax bill), but you still keep your metals.
You pay a fee for the transaction, but it should be less than your tax advantages.
Our preferred precious-metals dealer has been taking advantage of this “tax loophole” and transacting successful tax swaps for clients for over 30 years. (Note: PBRG doesn’t receive any compensation from recommending our trusted precious-metals expert to you).
Bottom line: Precious-metals tax swaps are a legal way to lower your tax bill while holding onto your metals. Look into them.
For instructions on conducting the actual swap—and contacting our preferred dealer—all PBL subscribers can click here. For everyone else, you can gain access through a 100% risk-free subscription to The Palm Beach Letter. Learn more right here.