What is Wash-Sale Rule?
A tax rule that disallows a loss deduction if you buy the same (or a substantially identical) security within 30 days before or after selling it at a loss.
Educational — not investment advice
The wash-sale rule stops investors from selling to book a tax loss and immediately re-buying to keep their position. If you repurchase within the 61-day window (30 days either side of the sale), the loss is disallowed for now — it’s added to the cost basis of the new shares instead, so you get the benefit later when you finally sell for good.
It commonly trips people up with automatic dividend reinvestment and with buying "substantially identical" securities like the same index fund at a different provider.
The trap most people miss
"Substantially identical" is broad and includes options and reinvested dividends, and the window spans the sale in both directions — so a purchase 25 days *before* the loss sale can trigger it too. Rules vary by country; this describes the US treatment.
Frequently asked about Wash-Sale Rule
How do I avoid a wash sale?
Wait more than 30 days to repurchase, or buy a similar-but-not-identical security to keep market exposure. Watch out for automatic dividend reinvestment.
What happens if I trigger a wash sale?
The disallowed loss isn’t lost — it’s added to the cost basis of the replacement shares, deferring the benefit until you sell those.
Related terms
Guides that use Wash-Sale Rule
In Tradune: estimate a harvestable loss with the tax-loss calculator.
Track what you actually own
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This definition is for educational purposes only and is not investment, tax, or financial advice. Concepts are explained in general terms; how they apply to your situation can differ. Always do your own research.