FP Answers: How is a coin collection taxed when the coins are sold?

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Q. I inherited my father’s coin collection when he died 15 years in the past. With the elevated gold price, I’ve lately bought a number of $100 Canadian gold cash (years 1976 by 2009) from the gathering. After I bought them I grew to become conscious that capital gains would apply to the sale of the cash. My quandary is that I have no idea what the worth of those cash was on the date of his dying (Nov. 11, 2009) so I can decide the capital achieve for every (notice that some cash had been $14,000 and a few had been $22,000).

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I’ve contacted my dad’s executor however he doesn’t have any data (resembling tax returns, value determinations, and many others.) of the cash’ value in 2009. I’ve additionally reached out to Canada Income Company (CRA), some native coin sellers, in addition to the Edmonton Numismatic Society, however, up to now, I’ve not acquired any steering from them. My query is: Are you conscious of a web site, a reference doc, or another supply that would supply this historic data for this number of Canadian $100 gold cash? And might you clarify to me how capital gains tax would work on this explicit scenario? Thanks for taking the time to contemplate this query. —Gordon, Pink Deer, Alta.

FP Solutions: Gordon, your father’s coin assortment would have been thought-about listed private property when he died, and may possible have been included in his estate valuation. Even in the present day with the advance of digital data that monitor the value of commodities resembling gold, in addition to information monitoring the value of collectibles, it could possibly nonetheless be difficult to pinpoint the historic worth of distinctive gadgets resembling gold cash.

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Oddly sufficient, although gold is traded 24/7 on global mercantile exchanges, it’s simpler to search out values for collectibles resembling buying and selling playing cards, comedian books, or motion figures than it’s for gadgets resembling gold cash issued by the Canadian Mint or different monetary establishments. One other problem is that collectibles, resembling gold cash, could derive their value not solely from their weight and purity but additionally the importance of that coin itself.

Many cash are issued to commemorate the anniversary of serious occasions, the contribution of notable people to society, and even to symbolize membership in a society or guild. These cash could not have a trackable historical past of their market worth as they might not have been broadly circulated and will have completely different values based mostly on the cash being a part of a specific run that was produced or a part of a broader assortment.

As talked about, the historic value of gold is well accessible on-line and is often expressed because the “spot” value, which represents the value of 1 ounce of pure gold. That is one method to set up a minimal worth on your cash if you realize the purity and weight, however figuring out their worth for tax functions, which could possibly be greater, could require extra analysis. I like to recommend looking for out a coin vendor or knowledgeable who has carried out value determinations prior to now.

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Listed private property may be of serious worth, with many dying in possession of collectibles resembling these talked about above or additionally together with gadgets like classic automobiles, designer furnishings, wonderful artwork and even sports activities jerseys. There are additionally public sale homes whose enterprise entails precisely valuing belongings to be put up on the market. In case you have hassle discovering a specialist who can consider your cash, you could possibly at all times search for any upcoming commerce reveals in your space and even in an adjoining province or state, as these could also be good venues to search out sellers who’re acquainted with your cash.

When it comes to the tax therapy of the sale of collectibles, they’re typically taxed as capital property triggering capital good points or losses when bought. Technically, the worth of your father’s cash ought to have been included in your father’s property for capital good points and property administration and probate tax functions. However the executor could not have these data all these years later, whether or not gadgets had been reported appropriately or not.

In your personal tax functions, if the sale of a collectible is beneath $1,000, its value may even be set at $1,000, and for those who obtain lower than $1,000 for the sale, the proceeds are additionally set at $1,000. This successfully makes the sale of any single collectible for lower than $1,000 tax free. There may be one exception to the rule, that for those who promote one a part of a broader set or assortment, the place the breakout value impacts the combination worth of the set, then you could deal with all the set as having a value foundation of $1,000, which might then be utilized proportionately to the opposite parts. This rule limits the power of a vendor to divide up a set and promote it as elements somewhat than a complete to keep away from taxes.

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When it comes to the way you calculate your personal capital good points or losses on disposition, you’ll solely want to find out the worth of those cash on the date of dying in 2009. Since you’ve gotten already bought a number of cash, it’s doable that the patrons you bought to can also have perception into these historic values and so you could possibly see if they’re consultants within the area or know somebody who might help.

Andrew Dobson is a fee-only, advice-only licensed monetary planner (CFP) and chartered funding supervisor (CIM) at Objective Financial Partners Inc. in London, Ont. He doesn’t promote any monetary merchandise in any way. He may be reached at adobson@objectivecfp.com.

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