Schedule E: Why did TT carry over a rental loss to 2025 when it was deducted last year?

[dominarofaction]

Personal residence was converted to rental use in late 2024, with active (but not material) participation. 

On the 2024 return, I entered the # of rental days and TT correctly prorated the deductible expenses, etc. to come up with a net rental loss of $2500.  That's well below $25,000, so TT correctly deducted the full $2500 loss on Schedule 1, line 5, of the 2024 return.  

However, fast forward to this year ... The property was rented for all of 2025.  TT Premier (Windows 2025) ported all 2024 information over to 2025, so it should "know" that the $2500 loss from 2024 was already deducted.  Yet it's treating it as a "vacation home loss limitation" carryover for 2025 and allocating it pro rata between Depreciation (line 18) and Other (line 19).  Intuitively, this doesn't seem right - why should I get a tax benefit from the same $2500 deduction/loss in both 2024 and 2025?   

I don't want to give up a $2500 tax benefit for 2025 if I don't have to, so I'm hoping someone will be able to explain why TT is doing this.  Or, if I'm right that it's not correct, how do I fix it in TT?  I don't see any box to check/uncheck, so do I just have to do a manual override?

Thanks in advance!

[PatriciaV · Accepted solution]

Since you know you received the passive loss carryover last year, you should delete the carryover amount transferred from your prior year return. Carryovers being listed in the wrong year is a known issue under investigation.

Return to your rental property and work through the Uncommon (Less Common) Situations topic for carryovers. Delete the amount from last year wherever it appears. If you receive a Smart Check message about missing carryovers under Review, enter a zero for all requested boxes.

[dominarofaction]

Thanks so much for your reply.  That's exactly what I ended up doing. 🙂