Exactly!! A net gain is not allowed for the one property. The computation is for the net gain or loss.
The IRS classifies renting out property as a passive activity unless you're a full-time real-estate professional. You can't deduct passive losses from non-passive income, only from other passive income. If you have a couple of rentals and one of them is in the red, for instance, you can write off the loss from one house against the gain from the other. If the grand total of all your passive activity is a loss, you have to carry it forward.
Use this link for more information:
Passive Loss Activity
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