I have study code section § 469 and did not find a single writing about requirement of using maximum allowable special deduction on real estate rental.
The only place they are talking about limitation on this deduction is § 469 (i) - $25,000 offset for rental real estate activities, and there is only talk about upper limitation of $25000 for married filling joint return and $12500 for married filling separate return if the filler lived apart from his/her spouse for entire tax year.
Instructions for line 22 ( Allowable Passive Loss Deduction) of Schedule E are very vague, and they are as follow:
" Do not complete line 22 if the amount on line 21 is from royalty properties.
If you have a rental real estate loss from a passive activity (defined earlier), the amount of loss you can deduct may be limited by the passive activity loss rules. You may need to complete Form 8582 to figure the amount of loss, if any, to enter on line 22. See the Instructions for Form 8582 to determine if your loss is limited.
If your rental real estate loss is not from a passive activity or you meet the Exception for Certain Rental Real Estate Activities (explained earlier), you do not have to complete Form 8582. Enter the loss from line 21 on line 22.
If you have an unallowed rental real estate loss from a prior year that after completing Form 8582 you can include this year, include that loss on line 22.
Instructions for form 8582 do not describe how to use nor where to forward the results of filling this form.
