Wash Sale Rule Guide (2026) - Tax Loss Disallowance
Wash sale rule guide: 30-day rule, substantially identical securities, loss disallowance, and compliance strategies.
Summary
Wash sale rule: loss disallowed if repurchase within 30 days before or after sale. Applies to substantially identical securities. Loss added to new position cost basis. Penalties: IRS audit, amended returns. Strategy: wait 31+ days, buy different fund, use tax-advantaged accounts.
Key Steps
- 130-day window: no repurchase 30 days before OR after selling at a loss.
- 2Substantially identical: same stock, same ETF, very similar funds trigger rule.
- 3Disallowed loss: added to cost basis of new position, reduces future gain.
- 4Tracking: broker reports wash sales on Form 1099-B.
- 5Avoidance: wait 31+ days, buy different ETF, use IRA (rule applies but offset by tax-free).