This post provides instructions to execute tax loss harvesting using a Vanguard brokerage account. For more background on tax loss harvesting, see my comprehensive tax loss harvesting guide for beginners:
- Part 1: tax loss harvesting background and account preparation
- Part 2: executing the tax loss harvest
- Part 3: what to do after tax loss harvesting plus advanced tips
Vanguard Tax Loss Harvesting Walkthrough
- Click on “My Accounts” at the top left of your screen, then click “Balances & holdings”
- You will see a list of your accounts. Click on “Cost basis” at the top of your regular taxable brokerage account.
- You will now see a list of all your funds in your regular taxable brokerage account. You want to determine whether any funds in your regular taxable brokerage account have a loss. To do so, you must click on “Show details” under each fund to see your gain or loss for each individual lot. This means you should have a separate row for every time you added money to a fund.
If you cannot see your individual lots, you need to switch your cost basis method. See how to set up your Fidelity account for tax loss harvesting.
- Identify any lots across all your funds that are “in the red” and have losses overall. The “Total Gain/Loss” column will be red with a negative number. Even if just one lot is in the red, you have a tax loss harvesting opportunity.
- For the funds you identified as having lots with losses, you must check whether you have a potential wash sale from purchasing the fund within the last 30 days. For background on wash sales, see Part 1 of the tax loss harvesting guide. To do this, check the purchase history (using the same buttons as in step 3) for any substantially identical funds in both your regular taxable brokerage and your IRA accounts for both you and your spouse. If you have made a purchase in the last 30 days, you should likely wait to tax loss harvest. For alternatives, see the advances tips in Part 3 of the tax loss harvesting guide.
- You have identified lots to sell and verified selling will not trigger a wash sale, so now you can sell the funds. On the same cost basis screen, click the “Sell” button near the top right.
- This will pull up the trading page. Enter the total quantity of shares you want to sell, which should equal the number of shares with losses. Select Order type of “Market” and ensure your Cost basis is “Specific Identification (SpecID).” Then click “Select Shares” at the bottom.
- You will now see a table where you specify which shares to sell in the “Number of shares to trade” column. For each lot (row) with losses, check the box to “Select all shares,” which will default the number of shares to the total you have in that lot. Verify you see a negative number signifying a loss at the bottom-right of your screen. Then click “Continue” at the bottom.
- Review your sell order and click “Submit.” If this is during market hours, your order will execute almost immediately. If this is outside of market hours, your order will execute when the market reopens. Repeat steps 6 through 9 for all funds you are tax loss harvesting.
- After your order executes, you will have additional funds available in your account to purchase your alternative fund. If you are not sure which alternative fund you will be purchasing, see my list of logical alternative funds in Part 2 of the guide.
To execute this purchase, return to the “My Accounts” -> “Balances and holdings” screen. Under your regular taxable brokerage account, click “Buy and sell” then “Trade Vanguard ETFs (and non-Vanguard ETFs).”
- The same trading page you used to sell your funds will appear, but this time it will be blank. Fill it out to execute your purchase.
- Account: ensure your regular taxable brokerage account is selected
- Transaction type: select “Buy”
- Symbol: enter the ticker of the alternative fund you are purchasing and click “Get Quote:
- Shares: click the “Dollars to shares calculator” button to calculate the right number of shares based on the money available in your account. You will see the “Funds available to trade” at the bottom-right of this page.
- Order type: select “Market”
- Click “Continue”
- Review your buy order and click “Place Order.” If this is during market hours, your order will execute almost immediately. If this is outside of market hours, your order will execute when the market reopens. Repeat steps 10 through 12 to buy all the alternative funds to replace the ones you sold.
- Congratulations, you just tax loss harvested in your Vanguard account! You now have realized losses for tax purposes without really modifying your portfolio. Be sure to read Part 2 of the tax loss harvesting guide to ensure you avoid a wash sale for the next 30 days.