Wash-Sale Rule

investment

Also known as: wash sale, wash-sale rule, IRS Section 1091

Updated · Written and reviewed by Konstantin Iakovlev

Detailed explanation

IRS Section 1091 covers the 61-day window (30 before + sale day + 30 after). Applies across all your accounts including IRAs and your spouse's accounts. Common pitfall: dividend reinvestment in a similar mutual fund triggers a wash sale unintentionally. The rule does NOT apply to crypto (as of 2026 — the proposed change to extend it to digital assets did not pass). It also does not apply to gains, only losses. Tax-loss harvesting strategies typically swap for similar but not "substantially identical" funds (e.g. VTI ↔ ITOT) to capture the loss while staying market-exposed.

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