State tax filing

Yes, rental income sourced from another state by a Michigan Resident is not taxable income on the Michigan return. 

Michigan starts with your Federal Adjusted Gross income, which in your case includes the rental income from one property and the rental loss from the other property, both of which are not located in Michigan. 

Michigan does not tax for (does not include in your taxable income) the income or loss from these properties because they are out-of-state. 

(It does not matter which state)

Therefore, 

if you claimed a loss on the federal return, you need to ADD that amount back in for the Michigan return. (You are not adding the loss as a loss, you are adding the loss as income) You are negating the loss. Michigan does not recognize the loss. 

if you claimed rental income on the federal return, you need to SUBTRACT that amount out for the Michigan return.  Michigan does not tax out-of-state rental income.  

In TurboTax, two screen in the Michigan State Return section ask about rental income and loss.  

The screen after that asks about Capital gains. 

Enter the income and loss from the out-of-state rentals and when the rental is sold, you will adjust the capital gain for that sale (if the Michigan tax code does not change)