Wash Sale Rule
An IRS rule that disallows a tax loss if you rebuy a ‘substantially identical’ security within 30 days.
If you sell a stock or fund at a loss and buy the same (or substantially identical) security within 30 days before or after the sale, the IRS disallows the loss for that tax year. The disallowed loss is added to the cost basis of the new shares, so you do recover it eventually. The rule matters most for tax-loss harvesting: you can sell VOO at a loss and buy a different S&P 500 ETF (like SPLG or IVV; though the IRS has not clearly defined ‘substantially identical’ for ETFs) to stay invested. The rule applies across all your accounts, including your spouse’s and your IRAs.
A 60-second lesson that puts this term in context, alongside the others, lives inside the Finlo app.