Tips to Remember when 1031 Exchanging Coins & Precious Metals

 Gold Bullion Coins

Personal property exchanges can be trickier than typical real estate 1031 exchanges because of the narrowness of the like-kind requirement. That goes doubly for exchanges of coins and precious metals. In this article, we are going to discuss a few things to keep in mind when 1031 exchanging coins and other precious metals.

Numismatic vs. Bullion Coins

There are two basic types of coins when it comes to 1031 exchanges:

  1. Numismatic Coins. These are coins whose value is judged by historical or artistic factors, rather than weight alone.
  2. Bullion Coins. These coins are valued solely by their physical weight or content.

These are hard-lined categories when it comes to 1031 exchanges. You can exchange numismatic coins for numismatic coins, and bullion coins for bullion coins, but not numismatic coins for bullion coins.

Like-Kind Coins & Precious Metals

The biggest concern when exchanging coins and precious metals is the like-kind requirement. Personal property exchanges have a very narrow definition of like-kind (compared to real estate exchanges, which have a very broad definition). To be safe, you want to make sure that you are exchanging out of and into coins of the same metal type – i.e. gold bullion coins for gold bullion coins.

These are a few examples of exchanges that would not be considered like-kind:

  • Currency. You cannot exchange your coins for currency in a 1031 exchange.
  • Different Metal Types. You cannot exchange coins of different metal types.
  • Other Real or Personal Property. You cannot exchange coins for other items for real or personal property.

Numismatic Coin Exchanges

There is some gray area when it comes to numismatic coin exchanges. Specifically, whether or not it’s viable to exchange gold numismatic coins for silver numismatic coins. There are arguments on both sides of this issue. It’s important to talk to a qualified intermediary for advice about your personal property exchange.

  • 1031 Hotline: If you have questions about 1031 exchanges of coins and precious metals, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

 

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved