Desktop: Where Do I Enter The Prior Year Loss on Real Estate Rental Property?

Rental activity is generally regarded as a passive activity. Those losses from rental property which the rental property earnings cannot offset are disallowed (unallowed). Unallowed losses cannot be deducted in the present year. They can however be forwarded to successive years to offset the future passive income.

There are two exceptions to this rule. The first is that a real estate professional is able to deduct losses in the very year they were incurred. The second is that the losses will be accepted in the event that the property is either sold or disposed of.

If the previous year tax return was filed using Taxx Savage Pro, previous year unallowed losses will automatically be pulled forward into the return of the present year and will be displayed in the Expense Menu of the property, under Unallowed Losses. They are referred to as “Other” expenses inSchedule E.

In order to view or enter the prior year unallowed loss on rental property:

Go to the Main Menu of the tax return
From the Menu, select Income
Then select Rents, Royalties, Entities (Sch E, K-1, 4835, 8582)
Proceed to Rents and Royalties
Select the property
Choose Expenses
And finally, Unallowed Loss.

Note: This is not tax advice. It is a guide on how to enter prior year loss in Schedule RE in the Taxx Savage Pro.

Additional Information:

IRS: Publication 925, Passive Activity and At-Risk Rules

IRS: Instructions for Form 8582 Passive Activity Loss Limitations