I own some rental properties and as I’m entering expenses my tax liability is actually increasing versus decreasing. Maybe because I can carry forward losses?

[Zbucklyo · Accepted solution]

Very likely.  Resist the temptation not to claim the expenses, because you are trading off lower taxes today for much higher ones in the future.  I assume you have positive net income from the rentals this year and indicated they are QBI eligible.  So, you are getting a 20% QBI deduction on the net income.  

If your income this year is insufficient to use up the suspended passive losses carried over, things look good because you are getting the QBI deduction, and still have zero taxable rental income.  When you add an expense, your net current year income decreases, and so dies the QBI deduction, increasing your tax liability.  

However, you are lowering your suspended passive loss carryover for the future. Since those passive losses can be used in the future under various scenarios, they have value.  You'll get the tax benefit of 100% of the expense, rather than 20%.