Confused About Timing a TLH

[MercyMe]

I want to tax loss harvest VXUS (Vanguard Total International equities) and buy IXUS to replace it.

1. Is it correct that I should sell VXUS before the ex dividend date (which is 12/19/22)? Doing this, I guess I miss out on the dividend payment.

2. Is it also correct that I should buy IXUS after the ex dividend date (which is 12/13/22)?

 

[qwerty3656]

I don't see why selling before ex dividend and/or buying after ex dividend would be a thing. If anything, you would want to do the opposite. Now since IXUS ex dividend is before VXUS, you probably don't have the liquidity to do both.

 

[COcheesehead]

The dividend is already in VXUS’s NAV. So it depends on your taxation. If you tax loss before, you won’t have to pay taxes on the dividend and all you’ll have is a capital tax loss. The overall value of the holding remains the same.
On IXUS it’s traditionally better to not buy a dividend because you’ll pay taxes on it without the benefit of holding it, so buy ex dividend if you can.

 

[audreyh1]

I don't see why selling before ex dividend and/or buying after ex dividend would be a thing. If anything, you would want to do the opposite. Now since IXUS ex dividend is before VXUS, you probably don't have the liquidity to do both.

Sell before the dividend if you have a loss so that you avoid income that is not long-term capital gains. If the fund only pays long-term cap gains distributions then it’s a wash.

Buy after the annual dividend so that you avoid taxable income from distributions.

Pretty simple.

 

[COcheesehead]

Sell before the dividend if you have a loss so that you avoid income that is not long-term capital gains. If the fund only pays long-term cap gains distributions then it’s a wash.

Buy after the annual dividend so that you avoid taxable income from distributions.

Pretty simple.

+1

 

[MercyMe]

Buy after the annual dividend so that you avoid taxable income from distributions.

Thanks. When you say "annual dividend", you mean the December ex dividend date, right?

 

[audreyh1]

Yes, I’m talking about the year end distributions usually paid in December.

The ex-div date is the earliest you can buy a fund without being paid that distribution.

 

[MercyMe]

Yes, I’m talking about the year end distributions usually paid in December.

The ex-div date is the earliest you can buy a fund without being paid that distribution.

Hmmm... looking again at the IXUS data from last year, they paid a dividend on 12/13 and again on 12/30. Should I wait to buy until after the 30th? I hate being out of the market for two weeks (if I sell VXUS this week).

 

[audreyh1]

First check what kind of distributions they are talking about. Are they substantial? Are they cap gains or dividend distributions? One of them most be much larger than the other. If this is a fund that normally pays a monthly dividend at the end of each month then it doesn’t matter so much.

And overall don’t worry about being out of the market for 2 weeks, that’s just noise. Could go either way you never know.

So IXUS pays out one distribution tomorrow - already ex-div after today.

 

[TheWizard]

OP is worrying way too much about TLH details.
I've TLH'd a bit lately and used market orders to sell and buy similar ETFs in a fifteen minute period.

You can TLH 12 months a year, when possible, not just in December.

Avoiding wash sales is a good idea when TLHing.

So relax and get on with it...

 

[MercyMe]

First check what kind of distributions they are talking about. Are they substantial? Are they cap gains or dividend distributions?

Here are the dividends from December of last year. My guess is the 30th dividend is capital gains.

Dec 30, 2021 $0.08556
Dec 13, 2021 $1.27348

And overall don’t worry about being out of the market for 2 weeks, that’s just noise. Could go either way you never know.

Haha... my history of bad luck tells me it won't likely go in my favor.

 

[audreyh1]

Here are the dividends from December of last year. My guess is the 30th dividend is capital gains.

Dec 30, 2021 $0.08556
Dec 13, 2021 $1.27348


Haha... my history of bad luck tells me it won't likely go in my favor.

I didn’t find IXUS listed here so maybe it isn’t paying a cap gains distribution this year: https://www.ishares.com/us/capital-gains-distributions
and you can’t use last year’s dates or amounts either.

 

[COcheesehead]

OP is worrying way too much about TLH details.
I've TLH'd a bit lately and used market orders to sell and buy similar ETFs in a fifteen minute period.

You can TLH 12 months a year, when possible, not just in December.

Avoiding wash sales is a good idea when TLHing.

So relax and get on with it...

There are nuances that can make tax loss harvesting very effective or completely negate the tactic, so it’s good folks are talking about it here.