Your Spouse Can Cancel Your Tax Loss
Selling something at a loss in a non-registered account to offset a gain you already took is one of the few tax moves a regular investor can make on their own, and almost everyone who does it knows to wait 30 days before buying back in. Far fewer people know that the 30 days covers their spouse's account too.
The superficial loss rule denies your loss if you, or a person affiliated with you, buys the same or identical property at any point from 30 days before the sale to 30 days after it, and still holds it on day 30. CRA lists your spouse or common-law partner as an affiliated person. So you can sell VFV, an S&P 500 index fund, in your taxable account, wait out the full month without touching it, and still lose the deduction because your spouse's automatic contribution bought VFV in their account two weeks later. Neither of you did anything wrong.
When the affiliated person is the one who bought it, the denied loss gets added to their adjusted cost base instead of yours, so it comes back later as a smaller capital gain in their hands. That is fine if you treat the two accounts as one household plan. It is a problem if you were counting on that loss to cancel out a gain you already triggered this year.
Buying the identical fund back inside your own RRSP or TFSA within the window does more damage, because a registered plan has no adjusted cost base for the denied loss to attach to. It is gone for good, not just deferred.
Personally I don't build my year around tax-loss selling and I don't think most people should. It is an occasional bonus when you happen to be sitting on a loss in a non-registered account, not a strategy worth chasing. But if you are going to do it, the 30 days has to cover every account in the household, including the automatic contributions you set up two years ago and stopped thinking about.
Has anyone here had a loss denied, or do you check your spouse's account before you sell?
