Investing - Theory, News & General • Any Way Around Wash Sales to Keep Same Holdings?

Background:

Let’s say that you bought $125k of Vanguard’s Large Cap Index Fund (VLCAX) and $125k of Vanguard’s Total Stock Market Fund (VTSAX), both on the same day.

You do not have any dividends reinvested.

70 days after your purchase, both funds have declined in value.

You wish to tax loss harvest, but you also want to keep your portfolio holdings as half in VTSAX and half in VLCAX.

Question:

Is there any way to accomplish your goal?

Proposed Answer:

I don’t think that there is.

If I sold all of VLCAX and immediately bought VTSAX with those proceeds, while also simultaneously selling all of VTSAX and buying VLCAX with those proceeds (ie, flipping the holdings, but also keeping them), the repurchasing of what just got sold would violate the wash sale rule.

I could sell all of VLCAX and buy VTSAX with those proceeds (or vice versa), and if VTSAX declined in value at 31 days’ time I could then sell some VTSAX and rebuy VLCAX (or vice versa), but that would mean that the portfolio was 100% in VTSAX (or VLCAX) for the 31 day waiting period (or longer, if VTSAX’s or VLCAX’s price never goes below what it was last purchased at).

Or I could sell all of VTSAX (or VLCAX) and use those proceeds to buy a third fund, and then later sell out that third fund and repurchase VTSAX (or VLCAX). But there is the risk that this third fund will never decline below your initial purchase price and thus you may be stuck with it forever.

Conclusion:

In short, the only way to avoid a wash sale violation when tax loss harvesting in a portfolio that initially has two holdings is to either accept that (1) the portfolio will only have one holding for a certain period of time; or (2) the portfolio will have to hold another third fund that was not initially part of the portfolio.

Is that all basically correct?

Thank you.

Statistics: Posted by Random Poster — Fri Oct 09, 2026 11:53 am