[Brande]

Tax loss harvesting. Can you sell VTI and buy VTSAX and have it count for a tax loss in a brokerage account?

Or are those 2 funds not considered different enough to claim the loss?

I am considering a tax loss harvesting strategy in my brokerage account.

Specifically, I want to know if it is possible and advantageous to sell shares of VTI (Vanguard Total Stock Market ETF) and immediately purchase shares of VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares).

Are there any specific IRS rules or potential pitfalls I should be aware of in making this move?

Additionally, how would this strategy impact my overall portfolio, and what are the potential long-term benefits or drawbacks?

I would appreciate insights from those who have experience with tax loss harvesting and managing similar investment portfolios.

Thank you!

[Patrick]

I haven’t seen any actions from the IRS regarding an exchange like this.

The only actions I’ve heard about are using the exact same security (cusip or ticker).

That’s not to say they couldn’t go after someone for a VTSAX to VTI exchange but I haven’t seen any evidence that they ever have.

[Rick]

Many people will exchange between their preferred vanguard, fidelity, or Schwab version of a fund or etf into the ishares version.

But if you feel they remain too similar, you could use VOO which would be plenty “less similar” for the need.

[Elizabeth]

No, that wouldn’t work to avoid the wash sale rule. They are identical.

[William]

I think it’s pretty clear that these two funds would be considered “substantially identical” since they are effectively different share classes of the same underlying pool of assets.

Especially since there are so many other total market funds available (eg ITOT) actually represent a different pool of assets, I definitely wouldn’t risk going from VTI to VTSAX (or vice versa).

Personally, even switching from one total market fund to another seems risky to me.

I have done a large cap and extended market fund split in the past though.

[Frank]

No, as they are technically just different parts of the same fund. Just buy VOO.

[Scott]

No. You should usually identify your tax loss harvesting partner up front when you have a position.

VTI and VOO are good, I would not harvest IVV with VOO.

If you are using value factors you can usually find an equivalent Avantis fund for a DFA fund and vice versa

[Rob]

requires them to besubstantially different… never tried that, not sure it really is… In the past, I have swapped VTI and SPY …

[Author]

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