Are Coin Collection Taxable?

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Written By Natasha Jones
I'm Natasha Jones, an avid collector of coins, stamps, and paper money. My passion drives me to seek unique finds, from antique shops to international exchanges. I enjoy connecting with fellow collectors through forums and meet-ups, sharing discoveries and insights. Collecting, for me, is about preserving history and building a community around this shared interest.

If you are a collector of coins, you may have asked, are coin collection taxable?

The taxability of coin collections depends on their purpose for the purchase. If you are a hobbyist, there is no need to worry about tax liability.

However, suppose you intend to sell your coins or use them as an asset to generate income.

In that case, you will want to ensure they are correctly valued when accounting for potential capital gains or losses on your tax return.

Are Coin COllection Taxable?

Introduction to Taxable Coins

You’ve likely heard the term “taxable coins” before, but what do they mean?

Coins that are taxable are those that have been designated as such by the IRS.

Coins that are not taxable are those that the IRS has not designated as subject to tax.

The difference between taxable and non-taxable coins is significant because of their potential impact on your wallet.

For example, if you sell a coin for more than $10,000 or 10% of its fair market value (FMV), it becomes subject to capital gains tax if you sell it as part of your collection or trade it in at an authorized coin dealer.

How to Determine the Taxability of Coin Collection

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If you are considering selling your coin collection, knowing the taxability of coins is crucial.

There are ways that coin collections can be taxable:

  • If They Were Purchased for Resale Purpopes
    • If a coin collector buys coins to resell them (or later decides to sell their collection), any appreciation in value above the price paid will be taxed as a capital gain. This includes purchasing circulated coins, selling them at an increased value, and buying rare or uncirculated coins, also known as “mint condition” or “uncirculated” conditions.
  • If They Were Purchased for Personal Use
    • Coins acquired solely for personal use are not considered investments by the IRS and therefore do not fall under any special tax rules associated with investments. However, if a person purchases rare or uncirculated coins to sell them for profit eventually, those same rules apply.

How to Determine the Fair Market Value of Coin Collection

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You can determine the fair market value of your coin collection by looking at coins currently selling for sale on the open market.

The most common way to conduct this research is by visiting an online marketplace like eBay, where you will find various coin prices based on their condition and age.

For example, if you owned a rare 1878 Morgan dollar (worth $1,300), then that would be considered your “face value” or “intrinsic value.”

However, if someone were interested in purchasing this same coin from you and wanted to know what it’s worth on the open market today?

They’d research by visiting sites like eBay and finding similar coins currently being sold there. Then, based on those prices alone—without knowing anything about your specific situation.

They could estimate how much something like yours might sell for today: $1,400 or even more!

From this point forward, when I refer to “fair market value,” I’m referring specifically to what something might sell for today based solely on what others are willing to pay right now (and not necessarily over time).

The taxability of a coin collection depends on the purpose for which it was purchased.

an-easy-guide-are-coin-collection-taxable

The taxability of a coin collection depends on the purpose for which it was purchased.

If you are a hobbyist, there is no need to worry about tax liability.

However, if you are a coin collector, the taxability of your collection depends on the purpose for which it was purchased.

If you bought coins as an investment and sold them in future years, it would be taxable income.

But this does not mean that if you had purchased them with other intentions (for example, as a hobby), then those intentions could not change over time into an investment purpose or vice versa.

So if your intention changes from one to another over time, it may have implications when calculating your capital gains or losses and any taxes payable on these transactions.

Before you go…

In conclusion, the taxability of coin collection depends on its purpose. If you are a hobbyist and collector, there is no need to worry about tax liability.

Check out my next article: “What Is The Best Way To Liquidate A Coin Collection?

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