Some opportunistic tax-free bond managers are up nearly 10% year-to-date (for municipal bonds, that’s a sizable gain in a short period of time). These managers typically buy bonds at ‘deep discounts’ and then sell the bonds after they’ve run up in value. When the bonds are sold, they often produce taxable capital gains.

Takeaway: If you’re invested in one of these portfolios, the bond’s interest payments are generally free from Federal (and sometimes state) income tax, but the manager’s selling activity may cause you to pay capital gains tax.

A quick check-in with your financial advisor and/or CPA can help you stay informed and (potentially) avoid any surprises come April 2022.

This happened back in 2018 (when we shot this clip), a near 10% year for some aggressive municipal bond managers.

Hope this helps!

Disclaimer: For information purposes only and should not be interpreted as legal, tax or financial advice. Always consult your CPA/tax advisor/attorney (or reach out to us;) to discuss your specific situation. Past performance is no guarantee of future results.