What Is the 61-Day Wash Sale Rule and How Does It Affect Your Taxes?
Learn how the 61-day wash sale rule prevents tax deductions on repurchased securities sold at a loss within 30 days before or after the sale.
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The 61-day wash sale rule prevents investors from claiming a tax deduction on a security sold at a loss if they repurchase the same or substantially identical security within 30 days before or after the sale. This means you must wait 61 days total—30 days before and 30 days after the sale date—to buy back the security and still use the loss for tax purposes. This rule is designed to limit tax avoidance through the sale and quick repurchase of investments.
FAQs & Answers
- What is the wash sale rule in investing? The wash sale rule disallows a tax deduction if you sell a security at a loss and repurchase the same or substantially identical security within 30 days before or after the sale.
- How long do I have to wait before buying a security again after a loss sale? You need to wait 61 days total—30 days before and 30 days after the sale date—to repurchase the security and still claim the tax loss.
- Why does the IRS have a wash sale rule? The IRS created the wash sale rule to prevent investors from claiming tax losses on securities they sell and quickly repurchase, limiting tax avoidance strategies.