For TLH purposes is it better to have everything at one brokerage?

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FIby45
Posts: 24
Joined: Wed Oct 30, 2019 4:41 pm

For TLH purposes is it better to have everything at one brokerage?

Post by FIby45 » Fri Nov 08, 2019 7:06 am

Administratively i mean.

Example:

TLH at Vanguard
Buy similar but not identical holding same day at fidelity

- I guess you can't exchange funds if you do this?
- Is it easier to prevent wash sale?
- Is paperwork easier at tax time?

Just starting to look into TLH and I currently have relatively new taxable accounts at two brokerages.

I am early enough that I could probably attempt to use one brokerage for the majority of my taxable investments.

For taxable I do have a $100k in muni bond fund at vanguard (taxable, just bought this week) and $150k in IEMG ETF at Fideltiy which currently has maybe a $6k short term gain.

I recently opened my Vanguard taxable (had some retirement stuff there for years) for the purpose of being able to more easily make automatically monthly buys using their funds.

dbr
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Joined: Sun Mar 04, 2007 9:50 am

Re: For TLH purposes is it better to have everything at one brokerage?

Post by dbr » Fri Nov 08, 2019 8:22 am

I would say there is some simplicity staying at one broker. For one thing if you sell at one broker and buy at another you would have to move the money in the process. I'm not sure it is easier to avoid wash sales but the accounting if you do have a wash sale might be more straightforward at one broker.

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: For TLH purposes is it better to have everything at one brokerage?

Post by MotoTrojan » Fri Nov 08, 2019 10:02 am

TLHing across brokers would likely result in an extended period of being out of the market which is a risk I wouldn’t take. Much safer to do same day buy/sell, or better get an overnight mutual fund exchange. That doesn’t mean you can’t have accounts at both brokers though and TLH each one independently.

stan1
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Re: For TLH purposes is it better to have everything at one brokerage?

Post by stan1 » Fri Nov 08, 2019 10:21 am

Multiple taxable brokerage accounts with similar asset classes adds complexity and increases risk of an inadvertent wash sale. We have three taxable accounts (1x joint, 2x individual) and file as MFJ so we do have to deal with some additional complexity and attention to detail when we tax loss harvest to make sure there isn't a wash sale.

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dratkinson
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Re: For TLH purposes is it better to have everything at one brokerage?

Post by dratkinson » Sat Nov 09, 2019 4:45 am

The most important part of the TLH is the day you sell to harvest your loss. That date is under your control whether you have one or multiple brokerage/fund family homes.

Assume selling/TLHing at brokerage/fund family S, and buying at brokerage/fund family B. The greatest delay is the time taken for the ACH from S to your bank (~2 business days). Your purchase at B happens immediately, even if its ACH pulls the money from your bank later.

I've done this and believe I was out of the market for ~2 business days. As I was TLHing bond funds, the NAV movement would have been minimal during those ~2 days. Why? Bond distributions are not embedded in NAV, so I was not worried enough to think to look.

However, if I'd been TLHing equities---distributions are embedded in NAV---and it was around a distribution date, then I'd want to pay more attention to the sequence and timing of transactions*.


* The circumstances surrounding every TLH are a little different, so you need to be aware of all the moving pieces.

My last (bond) TLH was in Dec 2018 and bonds and stocks were both down. What to do? I saw a stock buying opportunity by delaying my repurchase after the TLH. What? I noticed that TSM would pay a distribution on Monday of the next week (go ex-dividends on 24 Dec). So changed my mind (didn't do a bond TLH round trip), and instead delayed and purchased TSM on its ex-dividend date... before it rebounded on 26 Dec. Sweet. That's one in a row.


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d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

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