Not necessarily. Box 2 on Schedule K-1 reports rental income (loss) which is generally considered to be a passive activity. Losses from passive activities can only be used to reduce other passive income (most commonly income reported on Schedule K-1 for partnership and S-Corporation investments). However, there is an exception for rental losses that allow a loss for active participants up to $25,000. This is eliminated if your modified adjusted gross income exceeds $100,000 (or $75,000 if married filing separately), however.
Any unused passive losses carry over to future years to offset future passive income. When your interest in the partnership is sold or disposed of, you can take all losses carried forward in the year of disposition.
Please refer to the link below for more information regarding passive loss limitations specific to rentals.
Passive Activity Limits
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