Tax loss harvesting on VTI

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SYPM
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Joined: Sat Dec 05, 2020 8:45 am

Tax loss harvesting on VTI

Post by SYPM »

Hi Bogleheads
I had come across a topic on tax loss harvesting on ETFs
My question is - is it a good idea to do tax loss harvesting on VTI in brokerage account? What are the equivalent ETFs and how soon you can get back to VTI to avoid wash sale. e.g after 30 days?
Thanks for any advice
SYPM
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Nate79
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Re: Tax loss harvesting on VTI

Post by Nate79 »

SYPM wrote: Thu Sep 29, 2022 7:28 pm Hi Bogleheads
I had come across a topic on tax loss harvesting on ETFs
My question is - is it a good idea to do tax loss harvesting on VTI in brokerage account? What are the equivalent ETFs and how soon you can get back to VTI to avoid wash sale. e.g after 30 days?
Thanks for any advice
SYPM
The wiki has a list of TLH partners and much more info.

https://www.bogleheads.org/wiki/Tax_loss_harvesting

You should plan on the risk you are stuck with the partner for a long time. So choose something you are ok to keep holding.
Ninjadoc
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Re: Tax loss harvesting on VTI

Post by Ninjadoc »

ITOT and SCHB both good tax loss harvesting partners for VTI. See the bogleheads wiki for more info. Correct, don't buy VTI for 30 days. And make sure to sell all VTI you purchased in last 30 days, in addition to what you were already planning on.
Living Free
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Re: Tax loss harvesting on VTI

Post by Living Free »

Some folks seem okay with tax loss harvesting from one total market index fund to a different total market index fund which is from a different fund company and tracks a different index (eg, from VTI to ITOT). I use the vanguard total stock market index fund and the vanguard large cap index fund (ETF ticker would be VV) as tax loss harvesting partners (I feel it's more buffer with which to argue they are not substantially identical). S&P500 index would work well also, though personally I have that in my workplace retirement account so that might create wash sales.
rkhusky
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Re: Tax loss harvesting on VTI

Post by rkhusky »

SYPM wrote: Thu Sep 29, 2022 7:28 pm Hi Bogleheads
I had come across a topic on tax loss harvesting on ETFs
My question is - is it a good idea to do tax loss harvesting on VTI in brokerage account? What are the equivalent ETFs and how soon you can get back to VTI to avoid wash sale. e.g after 30 days?
Thanks for any advice
SYPM
Make sure you haven't purchased any VTI in any of your or your spouse's other accounts in the last 30 days (e.g. via dividend reinvestment).
placeholder
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Re: Tax loss harvesting on VTI

Post by placeholder »

Usually it's recommended here to be prepared to hold that replacement for a long time because the market might go up from the point you buy and never get that low again although if you're really determined to get back into vti in 30 days there's a roundabout way to do that.
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Raspberry-503
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Re: Tax loss harvesting on VTI

Post by Raspberry-503 »

Good advice above. Be ready to hold the alternate forever.
ITOT is a great choice
nalor511
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Re: Tax loss harvesting on VTI

Post by nalor511 »

placeholder wrote: Thu Sep 29, 2022 9:20 pm Usually it's recommended here to be prepared to hold that replacement for a long time because the market might go up from the point you buy and never get that low again although if you're really determined to get back into vti in 30 days there's a roundabout way to do that.
What's the roundabout way to get back into the original ETF without realizing the gains if the market goes up?
placeholder
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Re: Tax loss harvesting on VTI

Post by placeholder »

nalor511 wrote: Fri Sep 30, 2022 12:13 am What's the roundabout way to get back into the original ETF without realizing the gains if the market goes up?
1. Sell in taxable and leave in money market.
2. In tax advantaged sell equivalent amount of bonds and buy a reasonable alternative.
3. After 30 days buy back the vti in taxable then sell the stock fund in tax advantaged and buy bonds.
nalor511
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Re: Tax loss harvesting on VTI

Post by nalor511 »

placeholder wrote: Fri Sep 30, 2022 12:42 am
nalor511 wrote: Fri Sep 30, 2022 12:13 am What's the roundabout way to get back into the original ETF without realizing the gains if the market goes up?
1. Sell in taxable and leave in money market.
2. In tax advantaged sell equivalent amount of bonds and buy a reasonable alternative.
3. After 30 days buy back the vti in taxable then sell the stock fund in tax advantaged and buy bonds.
Got it. No bonds in tax adv so that doesn't work for me, thank you for the tip
MrJones
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Re: Tax loss harvesting on VTI

Post by MrJones »

placeholder wrote: Fri Sep 30, 2022 12:42 am
nalor511 wrote: Fri Sep 30, 2022 12:13 am What's the roundabout way to get back into the original ETF without realizing the gains if the market goes up?
1. Sell in taxable and leave in money market.
2. In tax advantaged sell equivalent amount of bonds and buy a reasonable alternative.
3. After 30 days buy back the vti in taxable then sell the stock fund in tax advantaged and buy bonds.
If "tax advantaged" is a 401k or similar, wouldn't it result in significant tax liabilities if the market goes up a lot in 30 days (eg, like in 2020)? Worse, it'd be treated as ordinary income.

If "tax advantaged" is Roth, and you happen to be holding bonds in it (not the greatest idea), I can see how this would work.
wbarabas
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Re: Tax loss harvesting on VTI

Post by wbarabas »

Just a heads up. VTI just paid out dividends in the past couple of days.
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MarkoRamius
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Re: Tax loss harvesting on VTI

Post by MarkoRamius »

Nate79 wrote: Thu Sep 29, 2022 7:38 pm
SYPM wrote: Thu Sep 29, 2022 7:28 pm Hi Bogleheads
I had come across a topic on tax loss harvesting on ETFs
My question is - is it a good idea to do tax loss harvesting on VTI in brokerage account? What are the equivalent ETFs and how soon you can get back to VTI to avoid wash sale. e.g after 30 days?
Thanks for any advice
SYPM
The wiki has a list of TLH partners and much more info.

https://www.bogleheads.org/wiki/Tax_loss_harvesting

You should plan on the risk you are stuck with the partner for a long time. So choose something you are ok to keep holding.
The wiki page is great, but I'm confused by the following sentence "(In our example, you will owe more capital gains taxes in the future because you bought back the fund at a cost basis that is $4,000 lower.)". Why does it says "more"? More than what?
Thanks, Marko
Doc7
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Re: Tax loss harvesting on VTI

Post by Doc7 »

MarkoRamius wrote: Fri Sep 30, 2022 6:59 am
Nate79 wrote: Thu Sep 29, 2022 7:38 pm
SYPM wrote: Thu Sep 29, 2022 7:28 pm Hi Bogleheads
I had come across a topic on tax loss harvesting on ETFs
My question is - is it a good idea to do tax loss harvesting on VTI in brokerage account? What are the equivalent ETFs and how soon you can get back to VTI to avoid wash sale. e.g after 30 days?
Thanks for any advice
SYPM
The wiki has a list of TLH partners and much more info.

https://www.bogleheads.org/wiki/Tax_loss_harvesting

You should plan on the risk you are stuck with the partner for a long time. So choose something you are ok to keep holding.
The wiki page is great, but I'm confused by the following sentence "(In our example, you will owe more capital gains taxes in the future because you bought back the fund at a cost basis that is $4,000 lower.)". Why does it says "more"? More than what?


More than you would without TLH.

If you had $10,000 of VTI that is now worth $8K, and sell today and buy $8000 of ITOT, when your ITOT increases in price back to $10,000 you will now owe, if you sold, taxes on 2K of capital gains. Whereas you would be at zero if you had never TLH VTI in the first place.

For many, this results in TLH being a tax deferral strategy. However, there are easy ways for TLH to be a complete tax elimination strategy.

If you give for instance 10% of your income to charitable organizations/church/whatever, in the future when you want to sell your ITOT - let’s say it’s worth $10K. If you’re planned giving that year was >$10K, you are about 3 clicks on your brokerage away from simply transferring (donating) the ITOT shares to a Donor Advised Fund, and then take your $10K of giving-money, and instead of giving it to the organization you buy yourself back $10K of VTI, ITOT whatever. From the DAF send money to your organization.

Now - you have permanently taken an advantageous tax loss harvest of $2,000. And completely made capital gains disappear. At this point in time you would own $10,000 of stocks (like you did at the beginning of the process) - which now have $0.00 capital gains - , your charity got $10,000 (like you had planned to anyway), and Uncle Sam is the only loser and you’re the only winner, with $2,000 losses applied to your taxes and there no future clawback because you do not have any capital gains.
livesoft
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Re: Tax loss harvesting on VTI

Post by livesoft »

MarkoRamius wrote: Fri Sep 30, 2022 6:59 am The wiki page is great, but I'm confused by the following sentence "(In our example, you will owe more capital gains taxes in the future because you bought back the fund at a cost basis that is $4,000 lower.)". Why does it says "more"? More than what?
The language is not precise. What is more precise is that the cost basis of the new investment will be lower than the cost basis of the original investment. This then means that if the new investment is sold at the same relative value as selling the original investment, then the realized capital gains will be larger. Whether one "will owe more capital gains taxes in the future" will depend on one's capital gains tax rate in the future which actually could be 0%. Also one doesn't have to actually realize a capital gain on the new investment if one gives away the share or if one dies, so there's that as well.

The possibiliies of either dying or a lower capital gains tax rate are mentioned in the sentences just after the one you quoted.
Last edited by livesoft on Fri Sep 30, 2022 7:27 am, edited 1 time in total.
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MarkoRamius
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Re: Tax loss harvesting on VTI

Post by MarkoRamius »

Doc7 wrote: Fri Sep 30, 2022 7:11 am
MarkoRamius wrote: Fri Sep 30, 2022 6:59 am
Nate79 wrote: Thu Sep 29, 2022 7:38 pm The wiki has a list of TLH partners and much more info.
https://www.bogleheads.org/wiki/Tax_loss_harvesting
The wiki page is great, but I'm confused by the following sentence "(In our example, you will owe more capital gains taxes in the future because you bought back the fund at a cost basis that is $4,000 lower.)". Why does it says "more"? More than what?
More than you would without TLH.

If you had $10,000 of VTI that is now worth $8K, and sell today and buy $8000 of ITOT, when your ITOT increases in price back to $10,000 you will now owe, if you sold, taxes on 2K of capital gains. Whereas you would be at zero if you had never TLH VTI in the first place.

For many, this results in TLH being a tax deferral strategy. However, there are easy ways for TLH to be a complete tax elimination strategy.

If you give for instance 10% of your income to charitable organizations/church/whatever, in the future when you want to sell your ITOT - let’s say it’s worth $10K. If you’re planned giving that year was >$10K, you are about 3 clicks on your brokerage away from simply transferring (donating) the ITOT shares to a Donor Advised Fund, and then take your $10K of giving-money, and instead of giving it to the organization you buy yourself back $10K of VTI, ITOT whatever. From the DAF send money to your organization.

Now - you have permanently taken an advantageous tax loss harvest of $2,000. And completely made capital gains disappear. At this point in time you would own $10,000 of stocks (like you did at the beginning of the process) - which now have $0.00 capital gains - , your charity got $10,000 (like you had planned to anyway), and Uncle Sam is the only loser and you’re the only winner, with $2,000 losses applied to your taxes and there no future clawback because you do not have any capital gains.
This answer is very clear, thank you!
Thanks, Marko
sycamore
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Re: Tax loss harvesting on VTI

Post by sycamore »

MrJones wrote: Fri Sep 30, 2022 1:34 am
placeholder wrote: Fri Sep 30, 2022 12:42 am
nalor511 wrote: Fri Sep 30, 2022 12:13 am What's the roundabout way to get back into the original ETF without realizing the gains if the market goes up?
1. Sell in taxable and leave in money market.
2. In tax advantaged sell equivalent amount of bonds and buy a reasonable alternative.
3. After 30 days buy back the vti in taxable then sell the stock fund in tax advantaged and buy bonds.
If "tax advantaged" is a 401k or similar, wouldn't it result in significant tax liabilities if the market goes up a lot in 30 days (eg, like in 2020)? Worse, it'd be treated as ordinary income.
...
This is one of those "in an alternative universe, what if..." questions that's hard to pin down. It's not likely that the only condition under consideration is what if stocks go up during those 30 days. What if bonds go down during the same time? In that case by being in stocks you avoided a loss in bond and the ultimate increase in your 401k balance was not all that much?

Like lots of things in investing, there are multiple factors to consider. In the general case of TLH, unless someone really can't stand the idea of owing the "partner" fund for a long time, seems reasonable to just avoid the roundabout way.
MrJones
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Re: Tax loss harvesting on VTI

Post by MrJones »

sycamore wrote: Fri Sep 30, 2022 10:45 am
MrJones wrote: Fri Sep 30, 2022 1:34 am
placeholder wrote: Fri Sep 30, 2022 12:42 am
nalor511 wrote: Fri Sep 30, 2022 12:13 am What's the roundabout way to get back into the original ETF without realizing the gains if the market goes up?
1. Sell in taxable and leave in money market.
2. In tax advantaged sell equivalent amount of bonds and buy a reasonable alternative.
3. After 30 days buy back the vti in taxable then sell the stock fund in tax advantaged and buy bonds.
If "tax advantaged" is a 401k or similar, wouldn't it result in significant tax liabilities if the market goes up a lot in 30 days (eg, like in 2020)? Worse, it'd be treated as ordinary income.
...
This is one of those "in an alternative universe, what if..." questions that's hard to pin down. It's not likely that the only condition under consideration is what if stocks go up during those 30 days. What if bonds go down during the same time? In that case by being in stocks you avoided a loss in bond and the ultimate increase in your 401k balance was not all that much?

Like lots of things in investing, there are multiple factors to consider. In the general case of TLH, unless someone really can't stand the idea of owing the "partner" fund for a long time, seems reasonable to just avoid the roundabout way.
From what I understand, the idea was to factor out all those conditions, and maintain your original position exactly, so that none of those factors would make a difference. Except that the tax loss would be harvested. This gets as close to the have your cake and eat it scenario as possible. All things remaining the same, I I was simply pointing out the difference between doing this is a tax-deferred vs tax-free account, both of which can be referred to as a tax advantaged account.

Agreed, best to avoid the roundabout way if at all possible.
MrJones
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Re: Tax loss harvesting on VTI

Post by MrJones »

Related TLH question with apologies to livesoft:

Let's say VTI, VOO, and ITOT are TLH partners. Let's say I own $100 of each of the three of these already.

Day 1: Sell $20 of VTI to tlh, and buy VOO
Day 7: market went down further.

In this case, can I TLH the $20 of VOO that I bought a week ago, without generating a wash sale? Or would it be a wash sale given that I bought under 30 days ago? Remember I'm not selling my entire position in VOO, just $20 worth.
Last edited by MrJones on Sat Oct 01, 2022 8:31 pm, edited 1 time in total.
sycamore
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Re: Tax loss harvesting on VTI

Post by sycamore »

MrJones wrote: Fri Sep 30, 2022 12:54 pm Related TLH question with apologies to livesoft:

Let's say VTI, VOO, and ITOT are TLH partners. Let's say I own $100 of each of the three of these already.

Day 1: Sell $20 of VTI to tlh, and buy VOO
Day 7: market went down further.

In this case, can I TLH the $20 of VOO that I bought a week ago? Or can I not sell VOO, given that I bought under 30 days ago? Remember I'm not selling my entire position in VOO, just $20 worth.
Can you TLH? Yes. But I think the unstated question is whether you can TLH without it being a wash sale, right?

The wash sale comes into play if you buy so-called replacement shares (of the ones you sold) within 30 days before or after. But the shares you bought on Day 1 are not replacement shares (correct?). They're just the shares you're selling.

Now if you had bought another set of VOO shares within 30 days of Day 7 (say a week before Day 1), then your sale of the Day 1 VOO shares would be a wash sale.
MrJones
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Re: Tax loss harvesting on VTI

Post by MrJones »

sycamore wrote: Sat Oct 01, 2022 8:49 am Can you TLH? Yes. But I think the unstated question is whether you can TLH without it being a wash sale, right?

The wash sale comes into play if you buy so-called replacement shares (of the ones you sold) within 30 days before or after. But the shares you bought on Day 1 are not replacement shares (correct?). They're just the shares you're selling.

Now if you had bought another set of VOO shares within 30 days of Day 7 (say a week before Day 1), then your sale of the Day 1 VOO shares would be a wash sale.
Thanks for the response! Correct, I was asking about whether it would be a wash, but worded my question poorly.

Makes sense. Whether IRS would consider something to be replacement shares always seems to baffle me. So:

- Not a wash sale
- 2010-01-01: Buy 1000 shares (lot A)
- 2020-02-01: Buy 50 shares (lot C)
- 2020-02-07: Sell 50 shares (lot C) at a loss. NOT wash sale since I didn't buy replacement shares

- A wash sale:
- 2010-01-01: Buy 1000 shares (lot A)
- 2020-01-25: Buy 50 shares (lot B)
- 2020-02-01: Buy 50 shares (lot C)
- 2020-02-07: Sell 50 shares (lot C) at a loss. *Is* a wash sale because IRS would consider lot B to be replacements?

What you're saying seems to be correct and consistent with for example, this page, but I'm not sure I fully grasp why. In the second case, I bought A, B, and C with the intention of hanging on to them. I then sold C at a loss. Why is B considered a replacement for C is something that still baffles me.

Thanks again.
rebellovw
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Re: Tax loss harvesting on VTI

Post by rebellovw »

Is this a wash sale? I don't think so but here goes:

Sept 2 - bought ITOT.
Sept 30 - sold all shared of ITOT.

I recall members here getting an immediate TLH when the replacement stock they buy suddenly sinks as well - they immediately replace that - w/o a 30 day wait.

Anyhow - though I did buy less than 30 days before I sold - I sold everything including that Sept 2 purchase - doesn't that avoid the wash sale?

Thanks,

Edit: I checked the flow chart - says I'm good.

Flow Chart: viewtopic.php?t=312970
Nothing since before July 5.
9/02 bought a little ITOT
9/29 sold all shares
9/30 Received Dividend from ITOT - not re-invested.
Last edited by rebellovw on Sat Oct 01, 2022 4:40 pm, edited 1 time in total.
livesoft
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Re: Tax loss harvesting on VTI

Post by livesoft »

How does your brokerage indicate a wash sale to you? Did your brokerage indicate this was a wash sale? Who is your brokerage?
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rebellovw
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Re: Tax loss harvesting on VTI

Post by rebellovw »

livesoft wrote: Sat Oct 01, 2022 4:20 pm How does your brokerage indicate a wash sale to you? Did your brokerage indicate this was a wash sale? Who is your brokerage?
I have fidelity - I have no indication mine was a wash sale - and under tax info - it shows the loss.
nalor511
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Re: Tax loss harvesting on VTI

Post by nalor511 »

rebellovw wrote: Sat Oct 01, 2022 4:26 pm
livesoft wrote: Sat Oct 01, 2022 4:20 pm How does your brokerage indicate a wash sale to you? Did your brokerage indicate this was a wash sale? Who is your brokerage?
I have fidelity - I have no indication mine was a wash sale - and under tax info - it shows the loss.
If it was a wasn you would see a big blue "W" next to the sale in tax info (fido)
livesoft
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Re: Tax loss harvesting on VTI

Post by livesoft »

nalor511 wrote: Sat Oct 01, 2022 4:27 pm
rebellovw wrote: Sat Oct 01, 2022 4:26 pm
livesoft wrote: Sat Oct 01, 2022 4:20 pm How does your brokerage indicate a wash sale to you? Did your brokerage indicate this was a wash sale? Who is your brokerage?
I have fidelity - I have no indication mine was a wash sale - and under tax info - it shows the loss.
If it was a wasn you would see a big blue "W" next to the sale in tax info (fido)
Like the big blue W in this video?
https://youtu.be/qqAx_3Wh8dE?t=78
Last edited by livesoft on Sat Oct 01, 2022 4:37 pm, edited 1 time in total.
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rebellovw
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Re: Tax loss harvesting on VTI

Post by rebellovw »

Thanks gang - yes - no 'W' in the year to date Tax info for ITOT sale. Great relief. And looking at the screen shot of the position of ITOT before the sale - no 'W' there like I have for my company stock which lands often in the account.
rebellovw
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Re: Tax loss harvesting on VTI

Post by rebellovw »

Follow-up to my question above - I see a position in ITOT in my wifes' taxable - that I created in 2020 (dividends are not re-invested) so no buys in the last 2 years. So when I sold all shares - that was my account - I assume I should tax loss harvest these as well (kicking myself for buying ITOT in her account.) They are still a little bit above water.

I guess to be free and clear and harvest the loss or small gain (3 digits) - I have to get rid of ITOT completely from her account.

Edit: I'm thinking there is nothing further that I need to do. By definition we cannot create a wash sale by my wife having two year old ITOT. She hasn't bought any in the last two years. I cannot trigger a wash sale since I've gotten rid of all mine and I will not buy any for the next 31 days.
nalor511
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Re: Tax loss harvesting on VTI

Post by nalor511 »

You need do nothing. If the markets drop more you can TLH the 2020 shares. Either way
rebellovw
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Re: Tax loss harvesting on VTI

Post by rebellovw »

nalor511 wrote: Sat Oct 01, 2022 6:27 pm You need do nothing. If the markets drop more you can TLH the 2020 shares. Either way
Thanks very much!
placeholder
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Re: Tax loss harvesting on VTI

Post by placeholder »

MrJones wrote: Fri Sep 30, 2022 12:54 pm In this case, can I TLH the $20 of VOO that I bought a week ago? Or can I not sell VOO, given that I bought under 30 days ago? Remember I'm not selling my entire position in VOO, just $20 worth.
Why is it a question for you that is what problems or reasons do you envision with selling something before 30 days?
MrJones
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Re: Tax loss harvesting on VTI

Post by MrJones »

placeholder wrote: Sat Oct 01, 2022 8:28 pm
MrJones wrote: Fri Sep 30, 2022 12:54 pm In this case, can I TLH the $20 of VOO that I bought a week ago? Or can I not sell VOO, given that I bought under 30 days ago? Remember I'm not selling my entire position in VOO, just $20 worth.
Why is it a question for you that is what problems or reasons do you envision with selling something before 30 days?
Wash sales.
placeholder
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Re: Tax loss harvesting on VTI

Post by placeholder »

MrJones wrote: Sat Oct 01, 2022 8:32 pm
placeholder wrote: Sat Oct 01, 2022 8:28 pm Why is it a question for you that is what problems or reasons do you envision with selling something before 30 days?
Wash sales.
What would cause a wash sale if you sold all of the recently purchased shares and didn't buy any substantially identical replacements?
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Gennaro Dillinger
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Re: Tax loss harvesting on VTI

Post by Gennaro Dillinger »

Doc7 wrote: Fri Sep 30, 2022 7:11 am
MarkoRamius wrote: Fri Sep 30, 2022 6:59 am
Nate79 wrote: Thu Sep 29, 2022 7:38 pm
SYPM wrote: Thu Sep 29, 2022 7:28 pm Hi Bogleheads
I had come across a topic on tax loss harvesting on ETFs
My question is - is it a good idea to do tax loss harvesting on VTI in brokerage account? What are the equivalent ETFs and how soon you can get back to VTI to avoid wash sale. e.g after 30 days?
Thanks for any advice
SYPM
The wiki has a list of TLH partners and much more info.

https://www.bogleheads.org/wiki/Tax_loss_harvesting

You should plan on the risk you are stuck with the partner for a long time. So choose something you are ok to keep holding.
The wiki page is great, but I'm confused by the following sentence "(In our example, you will owe more capital gains taxes in the future because you bought back the fund at a cost basis that is $4,000 lower.)". Why does it says "more"? More than what?


More than you would without TLH.

If you had $10,000 of VTI that is now worth $8K, and sell today and buy $8000 of ITOT, when your ITOT increases in price back to $10,000 you will now owe, if you sold, taxes on 2K of capital gains. Whereas you would be at zero if you had never TLH VTI in the first place.

For many, this results in TLH being a tax deferral strategy. However, there are easy ways for TLH to be a complete tax elimination strategy.

If you give for instance 10% of your income to charitable organizations/church/whatever, in the future when you want to sell your ITOT - let’s say it’s worth $10K. If you’re planned giving that year was >$10K, you are about 3 clicks on your brokerage away from simply transferring (donating) the ITOT shares to a Donor Advised Fund, and then take your $10K of giving-money, and instead of giving it to the organization you buy yourself back $10K of VTI, ITOT whatever. From the DAF send money to your organization.

Now - you have permanently taken an advantageous tax loss harvest of $2,000. And completely made capital gains disappear. At this point in time you would own $10,000 of stocks (like you did at the beginning of the process) - which now have $0.00 capital gains - , your charity got $10,000 (like you had planned to anyway), and Uncle Sam is the only loser and you’re the only winner, with $2,000 losses applied to your taxes and there no future clawback because you do not have any capital gains.
For me TLH has been a big help. I agree about it being tax deferral in the long-run but I have to say I have aggressively pursued TLH because of my desire to have losses to take advantage of when recognizing off-setting gains. I then have zero tax on the gain and can now move it where I now prefer the funds invested. I have a lot of things I am in I am trying to get out of while I move inexorably towards a 3-Fund portfolio. (I now see I may never get there completely in this life but I"ll do what the future allows and not worry about it.)

Completely agree you need to be prepared to stay in the TLH partner for a long time.
livesoft
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Re: Tax loss harvesting on VTI

Post by livesoft »

MrJones wrote: Sat Oct 01, 2022 8:38 pmWash sales.
Why are wash sales a problem anyways?* Are they a problem because someone told you they were a problem? Or that Bogleheads.org sizzles and catches fire when wash sales are mentioned?

I just created a wash sale and it is not a problem for me at all. Made a profit, too!
Last edited by livesoft on Thu Oct 12, 2023 3:35 pm, edited 1 time in total.
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the_wiki
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Re: Tax loss harvesting on VTI

Post by the_wiki »

Living Free wrote: Thu Sep 29, 2022 7:43 pm Some folks seem okay with tax loss harvesting from one total market index fund to a different total market index fund which is from a different fund company and tracks a different index (eg, from VTI to ITOT). I use the vanguard total stock market index fund and the vanguard large cap index fund (ETF ticker would be VV) as tax loss harvesting partners (I feel it's more buffer with which to argue they are not substantially identical). S&P500 index would work well also, though personally I have that in my workplace retirement account so that might create wash sales.
A happy medium might be SPTM or SCHK. SPTM holds 1500 stocks and SCHK holds 1000. Then you are still holding 90+% of the market.
the_wiki
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Re: Tax loss harvesting on VTI

Post by the_wiki »

livesoft wrote: Thu Oct 12, 2023 8:09 am
placeholder wrote: Sat Oct 01, 2022 8:38 pmWash sales.
Why are wash sales a problem anyways?* Are they a problem because someone told you they were a problem? Or that Bogleheads.org sizzles and catches fire when wash sales are mentioned?

I just created a wash sale and it is not a problem for me at all. Made a profit, too!
If nothing else, it is an accounting headache I'd rather not have.
rkhusky
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Re: Tax loss harvesting on VTI

Post by rkhusky »

livesoft wrote: Thu Oct 12, 2023 8:09 am
placeholder wrote: Sat Oct 01, 2022 8:38 pmWash sales.
Why are wash sales a problem anyways?* Are they a problem because someone told you they were a problem? Or that Bogleheads.org sizzles and catches fire when wash sales are mentioned?

I just created a wash sale and it is not a problem for me at all. Made a profit, too!
Bit of a misquote here. You want Mr Jones.
livesoft
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Re: Tax loss harvesting on VTI

Post by livesoft »

rkhusky wrote: Thu Oct 12, 2023 2:41 pm
livesoft wrote: Thu Oct 12, 2023 8:09 am
MrJones wrote: Sat Oct 01, 2022 8:38 pmWash sales.
Why are wash sales a problem anyways?* Are they a problem because someone told you they were a problem? Or that Bogleheads.org sizzles and catches fire when wash sales are mentioned?

I just created a wash sale and it is not a problem for me at all. Made a profit, too!
Bit of a misquote here. You want Mr Jones.
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MrJones
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Re: Tax loss harvesting on VTI

Post by MrJones »

livesoft wrote: Thu Oct 12, 2023 8:09 am
MrJones wrote: Sat Oct 01, 2022 8:38 pmWash sales.
Why are wash sales a problem anyways?* Are they a problem because someone told you they were a problem? Or that Bogleheads.org sizzles and catches fire when wash sales are mentioned?

I just created a wash sale and it is not a problem for me at all. Made a profit, too!
Neither. I simply want to understand when something is a wash sale and when it's not, so I account for it correctly with taxes, especially when the transactions are across brokerages and don't get automatically flagged as wash sales.
rkhusky
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Re: Tax loss harvesting on VTI

Post by rkhusky »

MrJones wrote: Sat Oct 01, 2022 3:36 pm
- A wash sale:
- 2010-01-01: Buy 1000 shares (lot A)
- 2020-01-25: Buy 50 shares (lot B)
- 2020-02-01: Buy 50 shares (lot C)
- 2020-02-07: Sell 50 shares (lot C) at a loss. *Is* a wash sale because IRS would consider lot B to be replacements?
The Fairmark author thinks that this should not be a wash sale because lot B is really not a replacement for lot C. However, the author notes that the IRS issued a ruling that indicates it is a wash sale. So, until someone takes the IRS to court to get it reversed, it is a wash sale.

This is a wash sale:
- 2010-01-01: Buy 1000 shares (lot A)
- 2020-01-25: Buy 50 shares (lot B)
- 2020-02-01: Buy 50 shares (lot C)
- 2020-02-07: Sell 50 shares (lot B) at a loss.

So is this:
- 2010-01-01: Buy 1000 shares (lot A)
- 2020-01-25: Buy 50 shares (lot B)
- 2020-02-01: Sell 50 shares (lot B) at a loss.
- 2020-02-07: Buy 50 shares (lot C)

Buying less than 50 shares of C would result in a partial wash sale.
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