First, understand that rental income and expenses are passive. Your passive rental losses can only be used to reduce your taxable passive rental income. That's it. Nothing else.
- How can I make use of that itemized deduction or am I out of luck?
You're out of luck.
- How can I move those points paid elsewhere so I can use it to increase my real estate losses?That's if I'm allowed to do so.
You can't move the points elsewhere. Period. Also, contrary to popular belief, points are not added to your cost basis. Points are amortized (not capitalized) and deducted over time (not depreciated over time). To enter your points *correctly* in TurboTax do the following:
In the Assets/Depreciation section select to Add an Asset.
Select Intangibles, Other Property and continue.
Select Amortizable Intangibles and continue.
You can describe it any way you want, such as "Mortgage Points". The cost is the total of the points your reporting/claiming, and the date is the closing date of your purchase or refi. Enter that data and continue.
Select Purchased New, and Used 100% for Business, the closing date of your purchase/refi (or the date property placed in service - whichever is later) and continue.
Select the Code Section 163: Loan Fees and continue.
Useful Life in Years is either 15 years or the life of the loan - whichever is greater. Then continue.
Now you're on the summary screen where you can "see details" of how much will be deducted (not depreciated) each year. Click continue, and you're done with this particular item.
- Where can I find my real estate losses (25,000) carried forward to the next year?
They'll be shown on the IRS Form 8582.
