Wash-Sale Rule

Category: tax

An IRS rule prohibiting an investor from claiming a loss on a security if they purchase a "substantially identical" one within 30 days.

The IRS hates people who sell for a loss just to claim the tax break, then buy it back immediately. If you sell at a loss and buy it back within 30 days (before or after), the IRS "disallows" your loss, and you can’t use it to lower your taxes.

Common Examples

• The wash-sale rule prevented us from claiming the capital loss because the client repurchased the fund shares just two weeks later.
• To maintain tax-loss harvesting efficiency, our trading software automatically tracks the 30-day window to prevent triggering a wash-sale.