Farm Irrigation

[spowens]

This is the first year that I am renting a farm that I acquired in January of 2023.  I am renting it for a fixed cash rent amount so it will get reported on Schedule E.  The tenant farmed and irrigated the property in 2023 but I did not receive my annual rent check until January of 2024.  On the property is a motor, well and pivot used for irrigation purposes.  I am depreciating this farm equipment on my 2023 tax return since it was in service all of 2023.  My question is, I am not benefiting from the depreciation in 2023 as there is no rental net income.  Will this depreciation automatically carryover to 2024 to decrease the rental income received that I will pay taxes on? 

[MarilynG1]

You will still get to claim the Depreciation Expense of the Farm Property itself, as well as the Farm Equipment, on your 2023 return.   If you have no rental income, the Schedule E loss amount will decrease any other income you have on your tax return.

Since the property was not vacant, but was actually being rented, you can claim any Expenses associated with operating your rental, even though rent was not received. You need to claim Depreciation each year, as it does not carry over, but is considered to be taken each year the property is in use. 

Here's more on Rental Property Depreciation. 

[spowens]

On Form 8582 my depreciation loss has been disallowed.  Can you tell me why?

[RobertB4444]

It is considered a passive loss.  It will roll over into next year when you have some passive income to take the loss against.

@spowens