When to SELL Muni Bond Funds - when moving out of state

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
craiggsean
Posts: 144
Joined: Wed Nov 27, 2013 5:47 pm

When to SELL Muni Bond Funds - when moving out of state

Post by craiggsean » Tue Aug 13, 2019 7:12 am

I know there were a few threads here but they didn't have an explicit answer so I am asking a similar question for those in a similar situation.

Grabiner's comment seems like a good rule of thumb but had follow up questions:
grabiner wrote:
Sun May 12, 2013 10:55 am
If your state exempts capital gains on state muni funds from taxes (some states do and some do not), while your new state taxes capital gains, you should sell the fund before you move if you have a gain, or after you move if you have a loss.
I'm moving out of NY state to a no-income-tax state (which has no muni bond funds).

Situation:
- NY muni tax exempt bond funds are with vanguard taxable account
- Cap gains are not that much (a few K's)
- long and short term gains
- Dividends have been set to reinvest (will stop that)

Question:
- Are NY muni tax-exempt bond funds Cap Gains tax exempt? (couldn't find the info)

- When is the best time to sell the muni bond funds (before/ after move, doesn't matter, etc.), considering short-term/long-term cap gains

- What are some alternative bond funds for a no-income-tax state? (i.e. long/intermediate tax-exempt national bond funds?)


Thank you in advance!

Gill
Posts: 5581
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: When to SELL Muni Bond Funds - when moving out of state

Post by Gill » Tue Aug 13, 2019 7:24 am

Capital gain on municipal bonds are taxable in NY. I’d sell after you move.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

Topic Author
craiggsean
Posts: 144
Joined: Wed Nov 27, 2013 5:47 pm

Re: When to SELL Muni Bond Funds - when moving out of state

Post by craiggsean » Tue Aug 13, 2019 2:40 pm

Thank you for that info, Gill.

I couldn't find that piece of info.

I guess the other side of the info is that after the move, the dividends are not tax exempt but the new state doesn't have state income tax so maybe that's equal.

On the other hand, the muni yields are lower than national ones.

In states with no state income tax, is it still worth it to buy tax-exempt bond funds?

User avatar
Duckie
Posts: 6763
Joined: Thu Mar 08, 2007 2:55 pm

Re: When to SELL Muni Bond Funds - when moving out of state

Post by Duckie » Tue Aug 13, 2019 8:03 pm

craiggsean wrote:In states with no state income tax, is it still worth it to buy tax-exempt bond funds?
If your income is high enough and you can't put all your bond AA in tax-sheltered accounts then a national muni bond fund might be useful. (VWITX) Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares (0.17%) is a good federally tax-exempt fund.

User avatar
grabiner
Advisory Board
Posts: 25002
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: When to SELL Muni Bond Funds - when moving out of state

Post by grabiner » Tue Aug 13, 2019 8:12 pm

Duckie wrote:
Tue Aug 13, 2019 8:03 pm
craiggsean wrote:In states with no state income tax, is it still worth it to buy tax-exempt bond funds?
If your income is high enough and you can't put all your bond AA in tax-sheltered accounts then a national muni bond fund might be useful. (VWITX) Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares (0.17%) is a good federally tax-exempt fund.
With $50K, you can get the Admiral shares at 0.09% expenses.

Either way, this is the fund that serves the same role in a taxable account as Total Bond Market Index in an IRA. It is probably slightly less risky now because of a slightly shorter duration (5 years versus 6).
Wiki David Grabiner

Post Reply