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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Srini who wrote (87401)	8/28/2007 2:03:01 PM
From: patron_anejo_por_favor	Respond to of 306849

>>Isn't there a looming issue about "state tax deductibility" ?<< Yes, but it's priced in and then some, and it's hardly clear that the Supreme Court will overturn the double deductibility. And even if they do, it's been priced in several times over already (at least for funds like NAZ). Let's say (for example) that Arizona no longer allowed state tax deduction on munis. There top tier is about 4.8%. So your talking about reducing effective yield on a 4% coupon from 100 x .04/(1-[.38 + .048])= 7% to 100 x .04/(1-.38) = 6.45% Most of the funds have already taken a 15% haircut, which is why this is fully priced in. If the court rules that deductability stands, of course, then we get a big bounce. In addition, this probably only affects same state funds and bonds, it would not effect an instrument like NUV which is a multistate muni fund.