Tax Loss Harvesting // Wash Sale Help

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Joined: Mon Jun 04, 2018 3:03 pm

Tax Loss Harvesting // Wash Sale Help

Post by fsh71 » Fri Aug 10, 2018 5:25 pm

So thanks to advice from the community I recently (2 days ago) got out of VWINX (Wellesley Income) in my taxable account, and exchanged it for 60% VSIGX (Inter. Term Treasury) / 40% VTSAX (Tot. Stock Mkt). Running backtesting on Portfolio Visualizer really made clear the impact all the income VWINX produces will have on my returns. This transaction caused me to realize approx $1k in long-term cap gains. I should add I anticipate being in the 12% tax bracket this year (hence the treasuries vs munis in taxable), although there is a non-zero chance I may realize unrelated investment gains this year that would put me in the next bracket up, where my cap. gains rate would be 15% rather than 0%.

That leads me to my question..

I have a sizeable holding of VT (Tot. World Stock) in taxable that is down as of market close today by approx. the same $1k. It would be a short-term loss. My first thought was to sell VT and buy VTI + VXUS in weights equal to VT. I'm worried that since I would be selling VT at a loss, and I bought VTSAX (mutual fund version of VTI etf) two days ago, this would be considered a wash sale. Is this a valid concern?

If so, rather than buying VTI, would buying VOO (S&P) + VXF (extended mkt) + VXUS (tot intl) in appropriate proportions avoid the potential wash sale?

Lastly, should I even go to the trouble for what is a small $1k gain, given that I will most likely remain in the 12% bracket in 2018?

Appreciate the advice.

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Re: Tax Loss Harvesting // Wash Sale Help

Post by livesoft » Fri Aug 10, 2018 5:34 pm

VT is not substantially identical to VTI, so there would be no wash sale if you sold VT at a loss and bought VTI + VXUS. I would consider it a good move.
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Re: Tax Loss Harvesting // Wash Sale Help

Post by sixty40 » Fri Aug 10, 2018 11:28 pm

VT, VTI, VOO, VSUX, VXF, all are not substantially identical to each other so no wash sale if sell any of these at a loss and buy another.

If VT is no longer in your long term plans, I would just sell it at a loss to offset your gains, and then buy what you want. That is what I would do.

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