Renting out part of my home - expenses exceed gross income

[MRL227]

Hello, 

This is my first year using TurboTax. I rent out part of my home, but my rental expenses exceed my gross rental income, meaning they should be limited. Unlike other software I've used, however, TurboTax doesn't seem to be limiting that amount and is carrying a negative amount from Schedule E into the rest of my return. Is this correct behavior? I don't think it gets limited on 6198 or 8582, so I'm not entirely sure where the loss limitation should be applied. 

Thanks!

[Carl]

It is common for residential rental real estate to show a loss on paper, at tax filing time for every year the property is in service.  So line 25/26 will show a loss most often.

If conditions are met (and they are for most folks) up to a maximum of $25K of those excess losses can be deducted from other ordinary income. Otherwise, if conditions aren't met and the excess loss isn't allowed, you'll see it carried over to the next year on form 8582.