Fiscal 2023 DIF Account

Municipal Bonds Have Tax Preferred Treatment

Since its inception in 1913, the federal income tax has exempted interest payments received from municipal bonds from taxable income. State and local governments also typically exempt interest on bonds issued by taxpayers’ state of residence.


Here is a link to the bonds issued on this project.    

Here is our question:       

How can these bonds receive tax exempt interest when the underlying land is not owned by the municipality????

Still do not understand how we can spend bond monies on properties the municipality does not own???    


This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. NOTICE OF SALE AND PRELIMINARY OFFICIAL STATEMENT DATED JANuARY 27, 2020New IssueFitch Ratings: AAMoody’s Investors Service: Aa3S&P Global Ratings: AA-(See “Ratings” herein)In the opinion of Locke Lord LLP, Bond Counsel, based upon an analysis of existing law and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Bonds will not be included in computing the alternative minimum taxable income of individuals. Under existing law, interest on the Bonds is exempt from Massachusetts personal income taxes, and the Bonds are exempt from Massachusetts personal property taxes. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “Tax Exemption” herein. The Bonds will not be designated as “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code