Last updated: January 19, 2026
The wash sale rule disallows a tax deduction for a loss if you buy a "substantially identical" security within 30 days before or after the sale.
This prevents investors from selling just to claim a loss while maintaining their position. The disallowed loss is added to the cost basis of the replacement shares.
The rule applies across all your accounts, including IRAs. Careful planning is needed when tax-loss harvesting.
Understanding wash sale rule helps you make better investment decisions and plan for taxes. Explore related concepts below to deepen your knowledge.
A wash sale happens when you sell a stock at a loss for tax purposes and buy it (or a similar stock) back within 30 days. The IRS ignores the loss for the current year.
If you trigger a wash sale, you cannot use that loss to offset your capital gains this year. The loss is deferred until you sell the newly purchased stock.
While not perfectly defined, it usually means the same company's stock or options. Buying a similar ETF from a different provider is often considered safe, but check with a tax pro.
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