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muni bond tax treatment question
Old 12-18-2013, 10:07 PM   #1
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muni bond tax treatment question

I am considering adding a chunk of muni bonds to my bond allocation and wonder if an ETF like MUB would be the way to go since I am a california resident. Do I get full state income tax exemption from MUB even though the funds holding are approx 75% from OUTSIDE the state of CA?

Would I then be better off buying only a California based muni bond fund?

thanks.
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Old 12-18-2013, 10:58 PM   #2
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To be exempt from CA state income tax, at least 50% of the fund's holdings must be federal and/or CA state or local bonds.
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Old 12-19-2013, 05:47 AM   #3
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Vanguard has a good option, California Intermediate Term Tax Exempt, VCAIX.
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Old 12-22-2013, 07:04 PM   #4
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I live in NY and I invest in ETFs for my muni exposure. I am in VTN and PNI. The CA versions of these ETFs are VCV and PCQ. Note that their yeilds are high mostly because of leverage so invest at your own risk.
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Old 12-22-2013, 07:31 PM   #5
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You can use a state specific fund to get full exemption. For a "national" type fund they will give you a breakdown at year end as to what % of the dividends came from each state, or they should have that info available.
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Old 12-23-2013, 06:11 AM   #6
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Quote:
Originally Posted by kmt1972 View Post
I live in NY and I invest in ETFs for my muni exposure. I am in VTN and PNI. The CA versions of these ETFs are VCV and PCQ. Note that their yeilds are high mostly because of leverage so invest at your own risk.
I think you meant CEFs, not ETFs.
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