Finance Maxxing
Capital Gains & Investments
Wash Sale Rule
Disallows loss if you repurchase same security within 30 days.
The wash sale rule prevents claiming a capital loss if you buy the same or a "substantially identical" security within 30 days before or after the sale.
The 61-Day Window
30 days before sale ← SALE DATE → 30 days after sale
↑ Cannot buy substantially identical security ↑
What Triggers a Wash Sale
| Triggers Wash Sale | Does NOT Trigger |
|---|---|
| Same stock/fund repurchased | Different company's similar fund |
| Same security in a different account | Different asset class |
| Spouse buys the same security | Buying after 30-day window |
| IRA purchase of same security | Selling one S&P 500 fund, buying another |
What Happens to the Disallowed Loss
The loss isn't permanently lost — it's added to the cost basis of the replacement shares, effectively deferring the tax benefit until you sell the replacement.
Note: The wash sale rule applies across all your accounts, including IRAs. A wash sale in an IRA can permanently disallow the loss.
Sources
Related Terms
More in Capital Gains & Investments
Long-Term Capital Gains (LTCG)
Gains on assets held over one year, taxed at preferential rates.
Short-Term Capital Gains (STCG)
Gains on assets held one year or less, taxed as ordinary income.
Holding Period
How long you held an asset — determines LTCG vs. STCG.
Net Investment Income Tax (NIIT)
3.8% surtax on investment income for high earners.
Cost Basis
Original purchase price used to calculate gain or loss.
Capital Loss Deduction
Losses offset gains; up to $3,000/yr against ordinary income.
Tax-Loss Harvesting
Selling investments at a loss to offset gains.
Qualified Dividends
Dividends taxed at LTCG rates instead of ordinary rates.
Stepped-Up Basis
Inherited assets reset cost basis to date-of-death value.