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Reasons for Municipal Bond Swapping

Monday, Dec 21, 2015

A muni bond swap is the simultaneous sale of one bond and the purchase of another. In this occurrence, a bond Tax Swap transaction replaces a bond with a market loss with a current market bond with similar or enhanced characteristics. Municipal Bond Tax Swaps can be accomplished in the current muni market environment. There are various strategies associated with a Municipal Bond Tax Swap, including to establish paper losses, upgrade holdings, extend or shorten maturities, and lock in gains.

Municipal Bond Swapping is an Advantageous Tax Strategy

A muni bond Tax Swap can be a very advantageous Tax Strategy. Tax trades usually do not require an additional investment and quality and income can be maintained. The transaction establishes paper losses while these losses can be carried forward indefinitely. The amount of loss established can be used to offset an equal amount of capital gains or to offset up to $3,000 of ordinary income in a given year.

Benefits of Municipal Bond Swapping

Muni Bond Swapping can be a very effective investment tool to:

1. Increase the quality of your investment portfolio
2. Increase your total return
3. Benefit from interest rate changes
4. Lower your taxes

Do not pay unnecessary capital gain taxes for 2015. If you have established capital gains in 2015 or would like additional information on bond swapping, call your GMS account executive!

The bond specialists at The GMS Group can offer assistances in the bond swapping process to ensure the highest level of financial success for the investor. Contact us online or give our municipal bond specialists a call today at 877-457-0070.