Wash Sale Rule
A loss is disallowed if you rebuy the same security within 30 days.
What is Wash Sale Rule?
Selling at a loss and buying a substantially identical security within 30 days before or after - a 61-day window - disallows the loss for now. The disallowed amount is added to the basis of the replacement shares. It applies across accounts, including an IRA purchase, and to a spouse's accounts.
Wash Sale Rule: a worked example
Sell at a $5,000 loss on March 1 and rebuy March 20: the loss is deferred, not lost, and rolls into the new basis.
More terms in Taxes & Account Types
Capital Gain (Short-Term vs. Long-Term)
Profit on a sale, taxed by how long you held it.
Cost Basis
What you paid, used to compute gain or loss on sale.
Tax-Loss Harvesting
Realizing losses to offset gains and up to $3,000 of ordinary income.
Qualified Dividend
A dividend taxed at long-term capital gains rates.
Traditional IRA / 401(k)
Deduct now, grow tax-deferred, pay ordinary income tax on withdrawal.
Roth IRA / Roth 401(k)
Pay tax now, grow tax-free, qualified withdrawals are untaxed.
Required Minimum Distribution (RMD)
Mandatory annual withdrawals from tax-deferred accounts starting at 73.
Step-Up in Basis
Inherited assets reset to market value at the date of death.