- Inheriting a coin collection, or other collectibles, generally doesn’t trigger an immediate tax liability.
- Taxes are typically owed only when you sell the coins for a profit.
- When you sell inherited coins for a profit, you may be subject to capital gains tax.
- The amount of tax you owe depends on whether the gains are considered short-term or long-term.
- Basis: The “cost basis” of inherited coins is generally stepped-up to their fair market value (FMV) on the date of the original owner’s death.
– This means you only pay capital gains tax on any increase in value after the date of inheritance.
– If you sell the coins for less than their FMV at the time of inheritance, you may incur a capital loss.
- Tax Rates:
– Short-term gains: If you sell the coins within one year of inheriting them, the profit is taxed at your ordinary income tax rate.
– Long-term gains: If you sell the coins after holding them for more than one year, the profit is subject to the long-term capital gains tax rate for collectibles, which has a maximum rate of 28%.
- Estate Tax: If the entire estate (including the coin collection) exceeds a certain threshold (e.g., $13.99 million in 2025 at the federal level), it may be subject to estate tax.
– Some states also levy estate taxes, with potentially lower thresholds.
- Inheritance Tax: A few states impose inheritance taxes, which are paid by the recipient of the inheritance.
– Inheritance tax laws and exemptions vary by state.
– [According to The Balance] , Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania currently collect inheritance taxes.
– Iowa’s inheritance tax is being phased out in 2025.
- Appraisal: Getting an appraisal to determine the fair market value of the coin collection at the time of inheritance is crucial, especially if no estate tax return was filed.
- Record Keeping: Maintain detailed records of the inherited coins and any related expenses (e.g., appraisal fees, cleaning, organization) to accurately calculate your cost basis and potential gains or losses.
- Professional Advice: Consulting a tax specialist or estate attorney is recommended to fully understand the tax implications of your inherited coin collection, especially if the collection is valuable or the estate is complex.
- If you sell inherited coins and realize a gain, you’ll need to report the sale on Schedule D (Form 1040), Capital Gains and Losses, and Form 8949, Sales and Other Dispositions of Capital Assets.
- The sale should be reported in the year you sell the coins, not the year you inherited them.
Disclaimer: This information is for general knowledge and should not be considered as tax or legal advice. Please consult with a qualified tax professional for personalized guidance regarding your specific situation.
Do you have to pay taxes on inherited coins?
Recipients of gifted or inherited coins owe taxes on any gains when the coins are sold. Profits are calculated based on the value at the time of transfer or the donor’s cost basis.
What to do if you inherit a coin collection?
Great question! Get a Free Evaluation of Your Inherited Coins
Your local coin shop is a great option, so long as they have a good reputation. Most coin shops will evaluate coins for free, and prepare an offer to buy specific items or even the whole collection. There’s no obligation to sell.
Are coin collections taxable?
Collectibles are considered alternative investments by the IRS and include things like art, stamps, coins, cards, comics, rare items, antiques, and so on. If collectibles are sold at a gain, you will be subject to a long-term capital gains tax rate of up to 28%, if disposed of after more than one year of ownership.