Taxes & Insurance

Taking a loss on stocks or bonds or funds will provide tax benefits. However, you can’t buy back the same security you sold at a loss within 30 days of the sale. If you do, that’s a “wash sale” and your capital loss won’t count.

There are three ways to avoid a wash sale yet maintain the structure of your portfolio:

1. Sit on the sidelines for at least 31 days. Then you can buy back the stock or bond or fund you’ve sold at a loss. However, you won’t profit if that security moves up during those 30 days.

2. Buy something that’s similar but not identical to the security you sold. There’s no required waiting period. If you sell one energy fund at a loss, for example, you can immediately buy another energy fund as long as it has different holdings from the one you sold. You’ll participate if energy stocks all move up right away.

3. You can buy first and then sell. Say you have 100 shares of stock you want to sell at loss, but you think the stock is still a good investment. You can buy another 100 shares of that stock.