I can't deduct my rental expenses on my federal return because of income level. The net loss on my rental was not carried over to my AZ state return, should it have been?

COMon · ‎June 3, 2019

My 140NR for AZ shows other types of income or losses but nothing for the rental. Is it correct to enter what income/expenses were from the rental and only applicable to AZ?

maglib · ‎June 3, 2019

AZ pretty much follows the fed when it comes to rental properties other than the depreciation. They have passive activity loss limitations to extent of income. Stick with basic depreciation and they will be similar. Issues exist if you have other properties though in other states as federal allows losses from one property to offset gains from another property while non-resident states only allow that states property. TT should handle this situation for you.

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I can't deduct my rental expenses on my federal return because of income level. The net loss on my rental was not carried over to my AZ state return, should it have been?