By Harry Prabandham · Updated September 28, 2026
Tax Planning
Wash Sale Rule: The 61-Day Window and How It Works
A wash sale occurs when you sell at a loss and buy substantially identical securities within 30 days before or after. The loss is deferred, not deducted.
Wash Sale Rule: The 61-Day Window and How It Works
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What is a wash sale?
- A wash sale happens when you sell stock or securities at a loss and acquire substantially identical ones within 30 days before or after the sale.
- The window spans 61 days: the 30 days before, the sale date, and the 30 days after.
- Buying a contract or option to acquire substantially identical securities in the window also counts.
- The loss is disallowed for now, but in most cases it is added to the basis of the replacement shares rather than lost.
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Full Guide
What is a wash sale?
- A wash sale happens when you sell stock or securities at a loss and acquire substantially identical ones within 30 days before or after the sale.
- The window spans 61 days: the 30 days before, the sale date, and the 30 days after.
- Buying a contract or option to acquire substantially identical securities in the window also counts.
- The loss is disallowed for now, but in most cases it is added to the basis of the replacement shares rather than lost.
Whose purchases count?
- Purchases in any of your accounts count, including at other brokers.
- IRS guidance treats purchases by your spouse, and by a corporation you control, as triggering a wash sale.
- A purchase in your IRA or Roth IRA can trigger it too, and in that case the loss is generally lost permanently, with no basis increase.
- Automatic dividend reinvestment and scheduled purchases can create wash sales without any deliberate trade.
What does substantially identical mean?
- The tax code does not define it, so it depends on facts and circumstances.
- Shares of the same company's common stock are substantially identical; a different company's stock generally is not.
- Preferred stock or bonds of the same issuer are generally not identical to common stock unless they are convertible and trade like it.
- The IRS has not ruled on funds from different sponsors tracking the same index, so that remains an unsettled question.
What happens to basis and holding period?
- The disallowed loss is added to the cost basis of the replacement shares, which reduces a future gain or increases a future loss.
- The holding period of the sold shares carries over to the replacement shares.
- When the replacement shares are later sold without another wash sale, the deferred loss is recognized.
- Broker reporting generally reflects wash sales only within the same account, so tracking across accounts falls to you and your CPA.
How do investors harvest losses without a wash sale?
- Waiting more than 30 days after the sale before buying back the same security.
- Buying a security that is similar in exposure but not substantially identical, accepting that it may perform differently.
- Buying additional shares first and selling the original lot more than 30 days later, which temporarily doubles the exposure and its risk.
- Pausing reinvestment and coordinating with a spouse's and IRA accounts during the window.
What mistakes come up most often?
- Repurchasing in an IRA or 401(k) within the window, which can make the loss permanently unusable.
- Forgetting an ESPP purchase of company stock that lands within 30 days of selling other company shares at a loss.
- Assuming a different broker or account type avoids the rule.
- Overlooking dividend reinvestment in a position you just sold at a loss.
Key takeaways
- The wash sale window is 30 days on either side of a loss sale.
- Purchases by your spouse, controlled corporation, or IRA can trigger it.
- Most disallowed losses are deferred through basis; IRA-triggered ones are generally lost.
- Review household-wide activity and confirm reporting with a CPA.
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