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 not too long ago offered a number of $100 Canadian gold cash (years 1976 by way of 2009) from the gathering. After I offered them I turned 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 acquire 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 (corresponding to 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, so far, I’ve not acquired any steerage from them. My query is: Are you conscious of an internet site, a reference doc, or another supply that would supply this historic info for this number of Canadian $100 gold cash? And might you clarify to me how capital gains tax would work on this explicit state of affairs? 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 of listed private property when he died, and will possible have been included in his estate valuation. Even right this moment with the advance of digital data that observe the worth of commodities corresponding to gold, in addition to knowledge monitoring the worth of collectibles, it will possibly nonetheless be difficult to pinpoint the historic worth of distinctive objects corresponding to gold cash.

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Oddly sufficient, although gold is traded 24/7 on global mercantile exchanges, it’s simpler to seek out values for collectibles corresponding to buying and selling playing cards, comedian books, or motion figures than it’s for objects corresponding to gold cash issued by the Canadian Mint or different monetary establishments. One other problem is that collectibles, corresponding to 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 great 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 extensively circulated and will have completely different values primarily based 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 definitely accessible on-line and is often expressed because the “spot” value, which represents the worth of 1 ounce of pure gold. That is one option to set up a minimal worth in your cash if you understand the purity and weight, however figuring out their worth for tax functions, which might be greater, could require extra analysis. I like to recommend searching for out a coin vendor or professional who has carried out value determinations previously.

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Listed private property could be of great worth, with many dying in possession of collectibles corresponding to these talked about above or additionally together with objects like classic autos, designer furnishings, positive 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. If in case you have bother discovering a specialist who can consider your cash, you possibly can all the time 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 seek out sellers who’re conversant in your cash.

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

In your personal tax functions, if the sale of a collectible is below $1,000, its value may even be set at $1,000, and in case you 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 in case you promote one a part of a broader set or assortment, the place the breakout value impacts the combination worth of the set, then you should deal with the complete set as having a price foundation of $1,000, which might then be utilized proportionately to the opposite parts. This rule limits the flexibility of a vendor to divide up a set and promote it as components moderately than an entire to keep away from taxes.

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When it comes to the way you calculate your personal capital features or losses on disposition, you’d solely want to find out the worth of those cash on the date of dying in 2009. Since you may have already offered a number of cash, it’s doable that the consumers you offered to can also have perception into these historic values and so you possibly can see if they’re consultants within the area or know somebody who will 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 respect. He could be reached at adobson@objectivecfp.com.

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