Thank you for your quick response. I understand that I can deduct my passive loss carryover amounts upon the sale of my rental property. What I'm concerned about is if I will have to pay 25% taxes on the unrealized depreciation amount which TurboTax never allowed me to deduct. That is an entirely different question than whether I can deduct passive losses. I don't believe that unrealized depreciation would be considered a loss; potentially a gain perhaps, but not a loss.
