What you do is set up rental property in TurboTax. You will enter the assets (land, building, and any other assets such as appliances). You will enter your rental income for the year, and you will also enter your rental expenses. TurboTax will calculate your depreciation expense, and will determine your overall income or loss from the rental for the year. If you have a loss and cannot use it in the current year, TurboTax will carry it forward until you have rental income that some or all of it can offset. If you sell the property with a loss carry forward, the loss will be used to offset any gain you have on the sale of the property. The key is to set things up properly in year one. See the following TurboTax Help article on reporting your rental income and expenses:
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