In particular, if I keep my HSA investments in one fund and let it grow year after year without selling, do I need to pay taxes on the growth? And if the value were to go down, do I report that as a loss?
In California, HSA accounts are treated as a normal investment account. Thus, capital gains and losses are reported in the year in which the investment fund buys or sells the underlying stocks or bonds or funds.
That is, the taxability of the fund not dependent on whether or not you took money out of the fund but whether or not the fund manager bought or sold assets. It is perfectly normal for investment funds to report interest and dividends and capital gains and losses that are taxable to you in a year in which you neither added money to the fund nor took money out of the fund.
To answer your specific question, if neither you nor the fund sells any stock, then you don't report any gain or loss. Gain or loss can be calculated only when you or the fund manager sell an asset. Likewise, you report a loss only when you or the fund manager sell an asset at a loss. You don't declare gain or loss on an asset whose value has changed, but only when you or the fund manager actually sell the asset.
In California, HSA accounts are treated as a normal investment account. Thus, capital gains and losses are reported in the year in which the investment fund buys or sells the underlying stocks or bonds or funds.
That is, the taxability of the fund not dependent on whether or not you took money out of the fund but whether or not the fund manager bought or sold assets. It is perfectly normal for investment funds to report interest and dividends and capital gains and losses that are taxable to you in a year in which you neither added money to the fund nor took money out of the fund.
To answer your specific question, if neither you nor the fund sells any stock, then you don't report any gain or loss. Gain or loss can be calculated only when you or the fund manager sell an asset. Likewise, you report a loss only when you or the fund manager sell an asset at a loss. You don't declare gain or loss on an asset whose value has changed, but only when you or the fund manager actually sell the asset.