VBILX to BND for tax loss harvest

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
jayoco
Posts: 25
Joined: Tue Jan 05, 2016 6:01 pm

VBILX to BND for tax loss harvest

Post by 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
Posts: 4237
Joined: Tue May 08, 2018 12:06 pm

Re: VBILX to BND for tax loss harvest

Post by 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.
Topic Author
jayoco
Posts: 25
Joined: Tue Jan 05, 2016 6:01 pm

Re: VBILX to BND for tax loss harvest

Post by jayoco »

It’s not efficient. I have no room in my tax deferred accounts.
Da5id
Posts: 4598
Joined: Fri Feb 26, 2016 8:20 am

Re: VBILX to BND for tax loss harvest

Post by Da5id »

jayoco wrote: Fri May 13, 2022 12:56 pm 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).
Last edited by Da5id on Fri May 13, 2022 1:21 pm, edited 1 time in total.
Topic Author
jayoco
Posts: 25
Joined: Tue Jan 05, 2016 6:01 pm

Re: VBILX to BND for tax loss harvest

Post by 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
Posts: 2898
Joined: Thu Apr 23, 2020 12:44 pm

Re: VBILX to BND for tax loss harvest

Post by tashnewbie »

Would a tax-exempt bond fund make more sense for you in taxable? Depends on your tax brackets.
Northern Flicker
Posts: 10434
Joined: Fri Apr 10, 2015 12:29 am

Re: VBILX to BND for tax loss harvest

Post by Northern Flicker »

jayoco wrote: Tue May 10, 2022 11:53 am 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.
Last edited by Northern Flicker on Fri May 13, 2022 5:41 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
exodusNH
Posts: 3582
Joined: Wed Jan 06, 2021 8:21 pm

Re: VBILX to BND for tax loss harvest

Post by exodusNH »

jayoco wrote: Tue May 10, 2022 11:53 am 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.
Post Reply