Content
- What Are Municipal Bonds?
- An Investment For Today's Tax-conscious Investor
- How Safe Are Municipal Bonds?
- The Advantages of Tax Exemption
- Understanding Yields
- Understanding Market Risk
- Understanding Calls
- Gains and Losses
- Types of Tax-exempt Municipal Bonds
- Bonds With Special Investment Features
- Taxable Municipal Bonds
- Other Basic Facts
- The Tax-exempt Municipal Bond Market-How Big and Who Buys?
- Tax-exempt/Taxable Yield Equivalents
- State Taxation of Municipal Bonds for Individuals
- State Taxation of Municipal Bonds for Corporations
- Glossary
All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association (SIFMA) from our membership and other sources believed by SIFMA to be accurate and reliable. By providing this general information, SIFMA is neither recommending investing in securities, nor providing investment advice for any investor. Due to rapidly changing market conditions and the complexity of investment decisions, please consult your investment advisor regarding investment decisions.
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- Bond Basics
- Gains and Losses
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Gains and Losses
If you sell a municipal bond for a profit before it matures, you may generate capital gains. Long-term capital gains (which require a 12-month holding period) resulting from the sale of tax-exempt municipal bonds are currently taxed at a maximum rate of 15%. Of course, if you sell your security for less than your original purchase price, you may incur a capital loss. Under current law, up to $3,000 of net capital losses can be used annually to reduce ordinary income. Capital losses can be used without limit to reduce capital gains. A municipal bond purchased at a premium or a discount and called or sold before maturity is subject to special rules. Since tax laws frequently change, consult with your tax lawyer or accountant for up-to-date advice.
