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

Usually, rental activity is regarded as passive activity. It is because of this that losses from rental property that are unable to be offset by income from rental property are disallowed. The losses that have been disallowed are not deductible in the present year. They can however, be carried into the subsequent years so as to offset the future passive income. 

There are two exceptions to this rule: 

• The real estate professionals are capable of deducting losses in the year they are incurred 
• When the property is sold or disposed of, losses are allowed 

The unallowed losses from previous years get pulled into the present year's return and are displayed in the Expense Menu of the property in the Unallowed Loss section. They are included in "Other" expenses in Schedule E. 

To either view or enter the previous year unallowed loss on rental property: 

• Go to the Main Menu of the tax return (Form 1040) 
• Proceed to the Federal Section 
• Once in the Federal Section, select Income 
• Then go to Supplemental Income and Loss, click Continue or Cancel at the 1099 question 
• Proceed to Schedule E Rental/Royalty 
• Select the Property 
• Click on Expenses 
• Then, Prior Unallowed Loss

Additional Information:

IRS: Passive Activity and At-Risk Rules

IRS: Instructions for Form 8582 Passive Activity Loss Limitations