The Tax Implications of Selling Gold to a Pawn Shop in Los Angeles

pawn shop in Los Angeles

Our world is full of financial red tape and regulations so there is usually some kind of tax implication for any kind of transaction that you might be hoping to make whether it is personal or commercial! 

A transaction that has increased in recent years is the selling of unwanted gold jewelry for a cash value. There are various ways to do this including via a private sale, selling to a jeweler, or selling to a pawn shop. 

It is still important to play within the rules even when searching for a good deal and to do that you do need to understand the potential tax implications of selling gold to a pawn shop in Los Angeles.

Is Gold Always A Taxable Item?

The short answer is yes, gold is considered to be a collectible by the IRS, and therefore subject to tax in the same way as items like fine art and antiques.

It is important to note that, for the most part, this refers to investment grade gold items such as gold commemorative coins, gold in round, flat shapes, any kind of all denomination bullion coins and numismatic gold coins, wafers and bars. It doesn’t usually include jewelry.

When it comes to selling your gold, think of yourself as an art collector. Essentially, the more valuable your ‘art’ is, the higher it’s tax value is going to be.

pawn shop in Los Angeles

Do You Have To Pay Tax On Gold Sold At A Pawn Shop?

The taxable rules vary slightly when you start thinking about the situation from the perspective of a pawn shop gold broker.

Gold jewelry that is sold for cash at pawn shops is considered under the category of scrap precious metal. This can be in any kind of condition from completely undamaged to scratched to broken to totally tarnished. The price that you get for your ‘scrap’ will almost always be based on the current price of gold and the percentage of commission that your broker factors in.

Gold brokers are not actually required to report the individual sale of gold except in one special circumstance. This is when you sell more than 25oz of South African Krugerrands, Canadian Maple Leafs, or Mexican Gold Onzas.

These particular items are considered to be regulated commodities, and it is a strict legal requirement that they be reported to the IRS. 

Any other kind of gold sales do not need to be reported and therefore it is unlikely they would get caught up in the taxation system.

The average pawn shop owner will be aware of the scrap metal rule and will guide you on your options should there be any potential issue that your jewelry is not scrapped.

If you are interested in selling gold under the scrap metal rule, you need to find a good pawn shop in Los Angeles that can accommodate your requests. Head over to the LA Loan Company website for more information about pawn shops in general and what kind of service you can expect to receive. The more knowledge you have when you step into a pawn shop, the more successful your experience is going to be.

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