VBILX to BND for tax loss harvest

[jayoco]

Does anything think selling the intermediate bond index (VBILX) and buying the Total bond index for tax loss purposes passes muster?

Thanks for any input.

[sycamore]

1. It would not be a wash sale, if that's a concern.

2. It basically swaps one intermediate term investment grade fund for another. There are some differences of course but overall the funds are more similar than different. VBILX has more credit risk (corp bond exposure) if that's a factor for you.

3. The more important question is whether bonds in a taxable account is tax efficient for you.

[jayoco]

It’s not efficient. I have no room in my tax deferred accounts.

[Da5id]

It’s not efficient. I have no room in my tax deferred accounts.

As above, it is totally fine. I'm assuming you are OK staying with BND forever in case it is never lower than the current value to swap back without realizing gains. Not predicting that by any means, just needs to be a consideration that swapping back out of a TLH pairing may not be free.

I-bonds are currently very trendy in bogleheads. They aren't perfect, but they are decent. And as a side benefit they expand your tax deferred space (interest on I-bonds is deferred until you redeem them).

[jayoco]

I hear ya on I-bonds and I’m in. 10k a year for me, 10k a year for my wife and 10k a year for our revocable trust. I wish they’d be A LOT more generous with the amounts.

[tashnewbie]

Would a tax-exempt bond fund make more sense for you in taxable? Depends on your tax brackets.

[Northern Flicker]

Does anything think selling the intermediate bond index (VBILX) and buying the Total bond index for tax loss purposes passes muster?

Thanks for any input.

About 56% VGIT and about 44% VCIT might be preferred to more closely match the market exposures and get an exemption from state and local income taxes from interest received in VGIT if either taxes are in play.

[exodusNH]

Does anything think selling the intermediate bond index (VBILX) and buying the Total bond index for tax loss purposes passes muster?

Thanks for any input.

You will be out of the market for one night if you go from a mutual fund to an ETF. That's not necessarily a bad thing, but something to be aware of. You could exchange into VBTLX instead. Note, though, that you cannot have Vanguard convert VBTLX to BND tax free like you can with VTSAX/VTI.