How does the IRS calculate taxes for ETFs? Until recently, I thought they were taxed the same as stocks, but I recently purchased a gold ETF (IAU) and have to pay a small capital gains tax even though I didn't sell any shares. Stocks are only taxed when they are sold (capital gains) whereas mutual funds can incur taxes while they are held when the underlying investments are bought and sold by the fund manager.

Which category do ETFs fall into? Does the tax treatment depend on the type of ETF? Where can I look this information up? I also own some bond ETFs and have thought about buying some real estate ETFs. Are they also taxed differently?

2 Answers 2


Very interesting question. While searching i also found that some precious metal ETFs (including IAU) gains are taxed at 28% because IRS considers it "collectible", rather than the usual long term 15% for stocks and stock holding ETFs.

As for capital gain tax you have to pay now my guess it's because of the following statement in the IAU prospectus (page 34):

When the trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss ....


Investopedia laid out the general information of tax treatment on the ETF fund structures as well as their underlying asset classes:


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