Sell My Diamond Engagement Ring – Tax Implications
For the most part, you are not taxed when you sell your jewelry to me unless you are significantly profiting.
Gold, platinums, and diamonds are treated as capital assets by the IRS.
For simplicity, I always tell clients that there is no tax liability on jewelry you sell to me. Here is a more in-depth look.
I always believed Tax Day was April 15th. However, as I looked this year, I learned that the IRS has set the deadline as April 18th. This post is timely for answering the question of tax implications on selling your jewelry like engagement rings and wedding bands and diamonds.
According to the IRS, these items are capital assets. The profits on capital assets are taxed at various rates depending on a few factors, most importantly income. The maximum rate is 20%. However, most consumers selling their jewelry are not profiting from the sale. They may receive money but no profit. Thus, since there is no profit, the tax liability is nothing. If you did significantly profit on the sale of jewelry, you are obligated to report that and pay taxes associated with the capital gain on that asset. Again, because, most consumers do not profit when they sell their jewelry, so there is no tax liability.
While there is no liability, you cannot write off the loss against your taxes either. Put another way, you cannot deduct the loss from the taxes. However, selling your jewelry gets you cash in your bank account.
Here are a few details worth noting. The IRS asks you to report only when there has been a gain. If you inherited an item and are worried about the tax liability when you sell it, the item is value at a fair market price. The difference between the fair market price and what you sell your item for is the profit (or loss) that the IRS considers.