It is very *uncommon* for rental property to *not* show ever increasing losses on paper as the years pass; especially if there's a mortgage on the property. On your tax return the carry over losses are shown on IRS Form 8582 and you'll see that loss amount increase with each passing year.
When you combine mortgage interest, rental dwelling insurance, property taxes and the depreciation you're required to take by law, that alone can quite easily exceed your rental income for the year. Add to that the other rental expenses and that makes it rare for rental property to ever show an actual profit on paper. Therefore the total losses accumulate and just continue to increase with each passing year since you are only allowed to claim your passive losses against passive income.
Now in the tax year you sell the property you will be allowed to "realize" all those losses first against any taxable gain you may get from the sale. If it gets your taxable gain to zero and you still have more loss to deduct, then you're allowed to claim it against other "ordinary" income - such as any W-2 income you may have that year.
Depending on your total AGI your loss for the year could be limited to as little as $3000. But that's still not a problem because the remaining loss is just carried over to the next year where the same rules apply.
Now in the tax year you sell the rental, if you report the sale in the rentals & royalty income section of the program, it will take care of all this for you automatically in the background. However, if your AGI is high enough to actually limit your "allowed" loss that year, the program will not always automatically carry that over to next year's taxes. So that's why once your tax return is accepted by the IRS, you want to print out a copy of *every* *thing* and not just the forms needed for filing or the forms to "keep for your records".
The IRS Form 8582 will show your loss amount that was not allowed that year (if any) and you "may" have to manually claim/enter that amount in the program when you do your taxes next year.
