Hi, 

I have two properties I am renting. One was rented for the entire year, one was rented for 137 days and was personal use before it was rented. Both properties have more expenses than income.  However, on the partial year rental instead of reflecting a loss, TT reduces my depreciation amount until my expenses are equal to my income from the unit. If I play around by changing the "fair rented days" to the entire year, the loss is not made equivalent to my income from the unit. It is only when I change it to 137 days rented that the loss disappears on Schedule E row 21.

My MAGI is below $100k.

I am an active participant.

The losses are $13k on the first unit and $3k on the partial year rental, so I am below the $25k passive loss threshold. 

Is this passive loss happening because it is a partial year? If so, does anyone know what IRS guidance I can review? 

KB