Never done Tax Loss Harvesting, need help for Dec 24th

[dvalley]

So I've never done this before but here's the situation:

1. I exchanged VIMAX for VTSAX in my brokerage account, thinking an exchange wouldn't incur capital gains. Looks like I was wrong, vanguard is showing $10k gain. Ugh. 15% LTCG on it is about $1500.

2. My recent purchases of VTI (same account) show $1800 loss.

My thinking is, sell all of VTI (Total Stock Market ETF) on Dec 24th locking in the $1800 loss.
Buy VTSAX (Total Stock Market MF) in the same account and hopefully quick enough that the market won't jump up too high.

Questions:

1. Is VTSAX similar enough to VTI that this is a no-no? If so, may be I'll buy VOO (S&P 500) instead.

2. How do I limit my risk of stock market jump between the sale and the buy? I have dry powder to cover the purchase if that would help.

Dec 24th is my only chance to try this if it's worth it.

Thanks in advance

 

[COcheesehead]

What Fidelity told me so I assume Vanguard is the same is that they will not track your tax loss harvesting activities so it is up to you as an individual in an IRS audit to justify your repurchase as substantially not equal. So if you feel they are not the same and can convince an auditor of the same, do it. If not, then look elsewhere.

 

[pb4uski]

I would say that VTI and VTSAX are identical... just different share classes of the same underlying portfolio. VOO woud be different.

 

[38Chevy454]

There is the 30 day wash sale rule that seems you might be in too close for comfort just switching between ETF and MF that are essentially identical. You can probably find a similar fund that won't trigger the 30 day rule, such as the VOO you suggested.


You can't control what will happen between your sale and buy points. All you can do is minimize that time to the extent you can. If market is going up, sitting in cash may cost you a little; if it goes down, sitting in cash benefits you.


Remember Dec 24th is a short day for trading, so ensure you get it done before market close (1:00 pm EST I think is close).


I did some tax loss harvesting, but just stayed in cash and actually took a distribution. Not the best way to get some cash, but the loss helps offset previous gain sales during the year.

 

[dvalley]

Thanks all...I'm thinking for $1800 the risk might not be worth it so I'll leave it alone unless I change my mind at the last minute lol

 

[N02L84ER]

If the first exchange, "exchanged VIMAX for VTSAX", happened within the past 30 days, you cannot sell VTI for a tax loss without running into the wash sale problem.

 

[Sunset]

If the first exchange, "exchanged VIMAX for VTSAX", happened within the past 30 days, you cannot sell VTI for a tax loss without running into the wash sale problem.

Good point...

OP - first off, 15% is not too bad, and of course this assumes you are correct with your income amounts and that it is 15% for LTCG and not 0%. ?

 

[LOL!]

You CAN sell VTI for a loss even within 30 days of buying those shares as long as you don't have OTHER shares that you bought within plus-or-minus 30 days (really 31 days, counting sale day). N02L84ER is incorrect in their statement. This myth is persistent because folks read only one sentence of the IRS rules and not the rest of the paragraph or they have not filled out their own tax returns after reading the instructions.

As for 2nd question about being out of market, you can sell VTI and immediately buy VOO or VV or other replacement shares one or two seconds later. If you cannot click or type that fast, you can open 2 browser windows into your brokerage account and do all but "confirm" or "submit" for both orders. Then click on the sale, see the result and click in the other window on the buy. Yes, it can really be that quick.

 

[dvalley]

I exchanged VIMAX for VTSAX on 10/23/2018 and also bought VTI on 10/23/2018 and then a bunch of times at different prices since then.

That's a good tip about two browser windows, I wonder if the funds from the sale will take time to settle. I should have enough in my settlement account to cover the purchase so I should be OK.

However, I'm leaning towards not bothering with it for a small amount. This was at least academic for me.

Can't thank you all enough for chiming in.