Glossary
Wash sale
A sale at a loss followed or preceded within 30 days by a purchase of substantially identical securities; US tax law defers the loss.
On this page
A wash sale happens when you sell a stock or other security at a loss and, within 30 days before or after that sale, buy the same or a "substantially identical" security. Under Section 1091 of the US tax code, the loss cannot be claimed at that time. The rule stops investors from booking a tax loss while keeping essentially the same position, and it is the main trap in tax-loss harvesting.
How it works
The window covers 61 days: the 30 days before the sale, the sale date, and the 30 days after. It is triggered by buying the security, acquiring it in a fully taxable trade, or acquiring a contract or option to buy it. Purchases by your spouse, or by a corporation you control, count. So does buying the security in your own IRA or Roth IRA.
The loss is not usually lost forever. It is added to the cost basis of the replacement shares, and their holding period includes that of the shares sold, so the benefit comes back when the replacement is sold. The exception is the IRA case: the basis inside the IRA is not increased, so that loss is effectively gone.
What to watch for
The rule applies across all of your accounts, but brokers generally report wash sales only within the same account and identical security, so tracking the rest is your job. "Substantially identical" has no bright-line definition for different funds tracking the same index, so many investors switch to a fund following a different index to stay clearly outside it. Gains are never affected; the rule only defers losses.