It's been a bull market for most of my investing career, so I've never had a chance to do tax-loss harvesting before. But this is a good time to dip my toe in the water. My taxable Vanguard account has a motley assortment of VFIAX, VIMAX, VSMAX, VTSAX, VTIAX and VTWAX, and I'd like to simplify.
I've read
Physician on FIRE's post and a few others, and I still have some questions that I was hoping some more knowledgeable Mustachians could answer.
1) What matters and what doesn't for wash-sale purposes: Holdings in a 401(k) or 403(b) don't count, but new investments in a regular or Roth IRA
do matter, correct? What about a 529 or an HSA? (There seemed to be some debate about this in the comments on POF's post.)
2) I had automatic dividend reinvesting turned on in my taxable account. As I understand it, to avoid a wash sale, you can't have bought any shares of the same index fund in
either the 30 days before
or the 30 days after you sell the shares that have a loss.
Since Q1 dividends were recently paid out, I have a problem there. Is it true that I can avoid a wash sale by selling the shares that were purchased as part of that reinvestment? Or would it be better/easier to just wait until it's been at least 30 days since dividends were paid out and do my TLH then?
3) I know that there are both short-term capital gains, which are for shares held less than a year and which are taxed the same as ordinary income, and long-term capital gains, which are for shares held for a year or more and are taxed at more favorable rates.
If I TLH some shares of both, how does that work? Is there one "bucket" of deductions that I can apply to any kind of capital gains? Or do the deductible losses on short-term holdings only apply to short-term capital gains and the losses on long-term holdings only apply to long-term capital gains?