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Simply a matter of tax law. Reasoning is basically to encourage investors to buy municipal bonds; thereby, helping communities finance their infrastructure needs (hospitals, roads, water and wastewater systems, schools, etc.).
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How are bonds taxed?
The income from bonds is taxed, unless the bonds are exempt from federal tax (municipal bonds) and/or state tax (varies by state). If there is gain on the sale of a bond (you receive more than you originally paid for it), the gain is taxable.
How are municipal bonds used?
Municipal bonds are used to borrow against assets.
Why Municipal Bonds Are An Attractive Investment?
Municipal bonds are bonds issued by local governments or their associated agencies to raise money for particular projects. Most often, municipal bonds are issued to build roads, schools and to complete projects such as sewer systems. These bonds offer the bond holder payments of interest over a certain period of time as well as the return of their initial investment. One of the factors that make municipal bonds an attractive investment is the tax exempt status they carry. Interest payments to the bond holder will not be taxed on the federal level and most state and local municipalities will waive the taxes on a local bond. While the interest rates paid on municipal bonds is always lower than other bonds on the market, the tax exempt status outweighs this negative aspect. Another factor to consider is risk. More often than not, municipal bonds have a very low risk associated with their purchase. This is a safer choice when looking into long term investment options. Most bonds are repaid in 20 -40 years. Bonds are rated before they are issued and those with the highest ratings will be the most likely to pay their debt when it is due. Many investors prefer municipal bonds to corporate bonds. Bonds of both types, issued for the same amount, do not produce the same amount of income. Because corporate bonds are heavily taxed a municipal bond will always pay the bond holder more in the long run. Municipal bonds can be purchased directly from the office issuing the bonds at the initial offering or later from a bond holding company. Bond issuing companies are required to use the money within 5 years of issuance to begin the project for which they raised the capital. If the project is cancelled or fails to begin on time, bonds will be repaid with interest and cancelled. Because of the many guarantees that are associated with municipal bonds investors like to stockpile them in their portfolios for the long term. When considering a long term investment a local bond offering may be the correct choice.
Are Municipal Dollar Bonds Callable?
Yes Dollar bonds can be callable
Are mutual funds insured Are municipal bonds insured?
Neither Mutual funds nor municipal bonds are insured. You can however purchase insurance on them
How is the interest on municipal bonds taxed?
In most cases interest on a Muni (municipal bond) is not taxed
How are bonds taxed?
The income from bonds is taxed, unless the bonds are exempt from federal tax (municipal bonds) and/or state tax (varies by state). If there is gain on the sale of a bond (you receive more than you originally paid for it), the gain is taxable.
What are the two types of municipal bonds?
Municipal bonds are either general obligation or revenue bonds.
How are municipal bonds used?
Municipal bonds are used to borrow against assets.
Have IRA invest acct with corporate and municipal bonds Know if you withdraw interest from corp it is taxable If you take interest from tax free municipal bonds is it also taxable?
No matter what your investments in an IRA are, the tax situation only unfolds when you withdraw money from the IRA. How the investments in the IRA earn a yield is irrelevant. If its a traditional IRA you will be taxed when you start withdrawing money at retirement. If its a Roth, you will not be taxed on withdrawals no matter what the investments are inside the IRA. Sinces IRA are taxed deferred in makes little senses to invest into a Tax Free Municipal bond.
When are municipal bonds exempt from taxes?
Municipal Bonds are bonds that are tax exempt from many tax offices. Municipal Bonds are exempt from tax when they are accepted by the local tax office depending on the law of the state.
Enjoy Tax Free Municipal Bonds?
When you purchase a municipal bond, you are essentially loaning money to a local government. This loan gives a government the opportunity to do construction projects and fulfill other needs of the community. A municipal bond can make an attractive investment for an investor, because it is something that is not taxed. There is no tax associated with a municipal bond. A lot of people choose to add a municipal bond or set of bonds to a retirement portfolio. The only downfall with a municipal bond is that its interest rate is usually a lot lower than other types of investments.
Which Oregon Municipal Bonds are available?
I believe this is the best and most updated list of Oregon Municipal Bonds that are available. http://investment-income.net/rates/municipal-bonds-rate-page
Where can you get insured municipal bonds?
When looking to secure insured municipal bonds to gain some advice before securing any. Sites such as Bank Rate offer information about insured municipal bonds. Information about how to get insured municipal bonds is available from the news section of the Morning Star website.
Where can information on buying municipal bonds be found?
An investment banker can provide information on municipal bonds and stocks. When purchasing municipal bonds you are technically lending money to the bond and in return getting reimbursed with interest.
What are some websites that I could learn about municipal bonds?
Municipal bonds are isused by counties, cities and states. They can be purchased directly from them upon their release. Another way to buy municipal bonds is through a broker.
Where does one find information about purchasing municipal bonds?
One can find out information about purchasing municipal bonds from the Securities and Exchange Commission website. There is an informative bulletin regarding municipal bonds located on their website.
