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Wash Sale Rule Explained: Avoid Disallowed Tax Losses
The 30-day wash sale rule prevents claiming a loss if you rebuy the same security too soon.
July 9, 20267 min readBy MyWealthForge
Key Takeaways
- 1Sell at a loss and rebuy within 30 days = wash sale.
- 2Disallowed loss added to cost basis of replacement shares.
- 3Applies across all your accounts including IRAs.
- 4Buy a similar (not identical) fund to maintain exposure.
Tax-loss harvesting saves taxes — but the wash sale rule trips up investors who sell and quickly rebuy the same stock or fund.
Pair with tax-loss harvesting guide.
How the Rule Works
30 days before AND after the sale — 61-day window total. Applies to substantially identical securities.
Loss is deferred, not lost — it increases your cost basis.
How to Avoid Violations
Swap S&P 500 fund for total market fund during the waiting period. Track purchases across all accounts.
Use taxable brokerage strategies carefully.
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