DEFINITION of 'Mortgage Subsidy Bond'

One of the few types of municipal bonds ever issued that may be subject to taxation, provided that the funds raised were used for home mortgages. Mortgage subsidy bonds were issued by cities and other municipalities, and may be either taxable or tax-free.

BREAKING DOWN 'Mortgage Subsidy Bond'

Mortgage subsidy bonds were created by the Mortgage Subsidy Act of 1980. They are issued by either state or local governments and are usually taxable. The exceptions are a select group of mortgage bonds and veterans' bonds.

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RELATED FAQS
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    Learn how tax-free municipal bonds may provide better returns than other types of bonds, and understand the risks of municipal ... Read Answer >>
  2. Where can I buy government bonds?

    The type of bond determines where you can purchase it, so you need to decide which type of bond you would like to purchase ... Read Answer >>
  3. How are subsidies justifiable in a free market system?

    Learn some of the arguments in favor of or against providing subsidies in a market economy, including economic and political ... Read Answer >>
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