If collectibles are sold at a profit, they 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. Collectibles sold at a profit are subject to ordinary income tax rates if they are held for a year or less. Collectibles, such as gold and silver coins, works of art, antiques and stamps, have experienced significant appreciation in value lately. As the buying and selling of collectibles increases, it is important to know the tax consequences of such transactions.

If collectibles are sold at a profit, the price increase is considered a capital gain for income tax purposes. For a retention period of more than one year, the gains are long-term. The downside for sellers is that long-term profits on collectibles are taxed at 28%, not at the 5% or 15% rate that is likely to be used to make a profit by selling other forms of ownership. To establish the basis, which is the cost of an item for tax purposes, owners of collectibles must keep a record of the price paid for the items, as well as any expenses related to the items, such as insurance or storage costs.

Expenses can be added to the base, thus decreasing the taxable capital gain when the property is sold. The person who inherits valuable collectibles will receive an increase based on market value at the time of the inheritance, rather than using a basis determined by the previous cost of acquiring the property. The new, higher base means a reduction in taxes when the property is finally sold. Inherited collection objects should be evaluated immediately in order to determine the value to be used in the event of an increase.

The IRS considers them an alternative investment. The percentages and figures of collectibles are very different from standard rates. The capital gains tax on net profits from the sale of a collector's item is 28%. Depending on adjusted gross income, you may also receive a net investment income tax of 3.8%.