Additional Information:
When it comes to long term residential rental real estate, it will practically always operate at a loss "on paper" at tax time every year. This is expecially true if there is a mortgage on the property. When you add up your deductible expenses of mortgage interest, property insurance, property taxes, and add to that the depreciation you are required to take on the property every year, those items alone are generally enough to exceed the total rental income received for the year. So add to that the other rental expenses you're allowed to deduct and you're practically guaranteed to operate at a loss "on paper" at tax filing time.
Now your passive rental losses can only be deducted from the passive rental income. Once those losses get that taxable rental income to zero, that's it. You can't deduct anymore. So the "left over" loss gets carried forward to the next year.
So as the years pass you will find that carry over losses will increase with each passing year. You don't get to realize those losses until the year you sell the property. But for the most part you can expect that the taxability your rental income each year will be "zero'd out" by all the rental deductions, expenses and depreciation you are required to take. Thats just how it works.
You find with each passing year
