muni bond tax treatment question

[sonomaguy]

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.

 

[Onward]

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.

 

[MichaelB]

Vanguard has a good option, California Intermediate Term Tax Exempt, VCAIX.

 

[kmt1972]

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.

 

[rbmrtn]

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.

 

[MichaelB]

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.