After the real estate bubble popped, I found it somewhat difficult to get clients to harvest tax losses. With some stock index funds down more than 50%, many said they already had a lifetime of capital losses at the IRS annual maximum of $3,000 annually.

Fast forward to the present. We now know that markets recovered with a vengeance. Those who did harvest tax losses gained a valuable asset to use as they rebalance going forward or take out funds to live on.

One key to tax-loss harvesting is to maintain a constant asset allocation. Though selling stocks after a plunge harvests the loss, you also may miss out on the gain. The IRS wash rules disallow the loss if one buys back a “substantially identical” stock or security or acquires a contract or option to do so within 30 days. You don’t want to stay out of the market for 31 days.

The solution is to buy a stock fund that is similar but not substantially identical. For example, if a client owns a Vanguard Total Stock Market Index Fund ETF (VTI), he could sell to harvest the loss and buy another fund. In my view, the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is substantially identical and may not pass this test. But buying the Schwab U.S. Broad Market Index ETF (SCHB) should meet the substantially different test, as it’s from a different fund family and based on a different index.

The California-based advisory firm Wealthfront has a list of low-cost ETFs that it will switch to for tax-loss harvesting while staying invested in the asset class and avoiding the IRS wash rule trap.

We need to remind our clients that taxes are costs too, and harvesting losses while maintaining asset allocation is one key to having higher returns.

Allan S. Roth, a Financial Planning contributing writer, is founder of the planning firm Wealth Logic in Colorado Springs, Colo. He also writes for CBS and has taught investing at three universities.

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