Thats because passive losses can only be deducted from passive income. Once those passive losses get your taxable passive income to zero, that's it. You can't deduct any more. The excess is carried over to next year where it will be deducted *IF* you have the passive income to deduct it from. That would be rare.
in fact, it's more common for your passive losses on rental property to increase with each passing year. You can't actually "realize" those losses until the year you sell or otherwise dispose of the property. You'll see those carry over losses on IRS Form 8582 line 1d.
