Passive Loss

phibarn — Tue, 10 Mar 2026 06:52:28 GMT

I live in a 2 family house where I rent the apartment I do not live in. In recent years, my expenses for the rental apartment exceed the rental income, and I have a significant "passive loss" which is not tax deductible. When rental starts to exceed the expenses, can I deduct that profit from the existing passive lost to pay less income tax?

Re: Passive Loss

DavidT0202 — Wed, 16 Nov 2022 21:51:03 GMT

Hi @phibarn

Passive Losses are able to be carried forward as long as you claimed them in previous years and they were disallowed.

Generally, losses from passive activities that exceed the income from passive activities are disallowed for the current year. You can carry forward disallowed passive losses to the next taxable year. A similar rule applies to credits from passive activities.

See this Publication HERE

These deductions are not lost forever. Rather, they are carried forward indefinitely until either of two things happen:

you have rental income (or other passive income) you can deduct them against, or
you dispose of your entire interest in the property.

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Passive Loss

Re: Passive Loss