What Is a Wash Sale?
A wash sale is selling an investment at a loss and buying it, or something substantially identical, back within 30 days before or after. What the rule does to your loss, and how to harvest losses without breaking it.
In one sentence
Wash sale. Selling an investment at a loss and buying a substantially identical one within 30 days before or after. The loss can't be deducted at that time.
How it works
US tax rules don't let you deduct a loss on stock or securities if, within 30 days before or after the sale, you buy substantially identical securities. A purchase by your spouse, or by a corporation you control, counts too.1 That makes the window 61 days long: the 30 days before the sale, the day itself, and the 30 days after.
What happens to the loss
A disallowed loss usually isn't lost. It's added to the basis of the new shares, which postpones the loss until you sell them, and your holding period carries over too. The exception is a replacement bought in an IRA: then the new shares' basis isn't increased.1
| Bought 100 shares at $50 | $5,000 |
|---|---|
| Sold 100 shares at $40 | Loss of $1,000 |
| Bought 100 again at $41, ten days later | A wash sale: the loss is disallowed for now |
| Basis of the new shares | $4,100 + $1,000 = $5,100 |
The $1,000 loss comes back when the new shares are sold, as a lower gain or a bigger loss.
Learn it properly
- Capital Losses, Tax-Loss Harvesting, and Wash SalesPart 6: Strategy, Behavior, Accounts, and Taxes
Notes and sources
- Internal Revenue Service. Publication 550 (2025), Investment Income and Expenses. Checked 2026-10-11. Back to text