A municipal bond, colloquially referred to as a muni bond, is a debt instrument originated by a state or local government for financing public projects. These bonds are generally exempt from federal as well as state and local taxes, and as a result investors demand a lower yield relative to bonds that aren’t tax-exempt.

Municipal bond yields are often used in real estate analysis to determine the appropriate discount rate for valuing a property tax abatement.

 

« Back to Glossary Index