But what about funds with significant overlap in their holdings? Rubin said that as long as the funds are actively managed, there shouldn't be a problem, because obviously no two managers have an identical strategy. And in the case of index funds, the funds should be based on different indexes in order to abide by the wash-sale rule.
Be aware, too, that you cannot sell a security in your brokerage account, harvest the loss, and buy it immediately in your individual retirement account or 401(k) plan. "Another common thing people don't realize is that they can trigger a wash if it goes in the other direction — if they bought a fund in the last 30 days and then sold it to get the loss," noted blogger and CPA Piper.
Tax-loss harvesting is easier to do with funds as opposed to individual stocks, explained Rowling.
"With a mutual fund or ETF, you can find a strategy that's similar, but that's harder to do with a stock," she said.