What is the Capital Gains Tax Rate on Jewelry? (2024)

Picture this.

You own a fine piece of jewelry, a ring. Perhaps this ring has been in your family for a while. Your insurance company valued the ring at $4,000.

But maybe the jewelry isn’t to your taste. Or you’re tired of paying the insurance rider on something that isn’t really useful to you.

You take that ring to a local gold and silver store and sell it for $6,000. You walk away, happy with the cash in hand. But you neglected one thing.

You’ll likely be taxed on the profit from that sale. Welcome to the world of capital gains taxes.

Capital Assets, Capital Gains

Whether you buy a piece of jewelry or inherit it, you’re in possession of what the IRS calls a capital asset. Anything you own and use for personal or investment purposes is a capital asset.

When you sell that capital asset, you either earn a profit on it, or you don’t. When you earn a profit on the sale – also known as capital gains – you’re required to pay taxes on it.

How much? It depends on how long you own the asset (in this case, the jewelry). If you own it for less than a year, the gain is taxed at an ordinary income rate. If you own the jewelry for a year or longer, the profits are taxed at the capital gains rate. If you incur a loss on that sale, you owe nothing.

Jewelry, Capital Gains, and Taxes

Capital gains on jewelry aren’t taxed any differently than capital gains from the sale of stocks, real estate, or commodities. On the federal level, your capital gains tax is based on your taxable income and marital status.

The 2022 capital gains tax rate is below:

In addition to the above, some states impose their own capital gains taxes.

But How Much is it Worth?

It’s one thing if you bought a piece of jewelry. You know what you paid for it. When you sell it, the difference between what you paid versus what you sold it for will be your capital gain (or loss).

But what happens if you inherit jewelry and then sell it? This is where it gets a little trickier.

In this case, you need to know the cost basis, or the jewelry’s original value. One way to determine this is through a jewelry expert’s appraisal. Another is to determine the jewelry’s fair market value (FMV) at the time of the decedent’s death, or when the asset transfer occurs. The FMV is the value of an asset is what the market will pay for a particular asset.

Be Tax Aware

While you might be anxious to unload jewelry, be sure you understand the tax consequences of its sale. Some of the profit you earn might have to be paid through state and federal capital gains taxes. If you have any questions on this, ask your tax professional for clarification.