Municipal Bond Forum
Virginia resident, California bond funds
Q
I recently inherited some shares of two tax-free California bond funds. I am a Virginia resident but have a small amount of California income from a rental property there and therefore do file a non-resident California state return along with my Virginia return. Are these type of funds generally tax-free to in-state residents only? Is there a reason for a Virginia resident to hold California bonds? My inclination is to liquidate them, though I’d be interested in your thoughts.
A
James A. Klotz responds:
Your inclination is correct. Your California bond funds are subject to Virginia State tax.
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