topic Re: Schedule E will not allow loss in Deductions & credits

Schedule E will not allow loss

mw291 — Tue, 24 Feb 2026 08:06:25 GMT

I added a second rental property in 2022. The first property has accrued passive losses over the years on Form 8582 since I do not meet the income requirements to take an actual loss. I converted the 2nd property from personal to rental property use in July 2022. The 2nd property should also show a loss, but instead, no matter how I modify the expenses, the Schedule E will not show a loss. Rather, it keeps adjusting the depreciation deduction to result in a net zero profit. The depreciation form shows the full authorized depreciation amount. I have adjusted numerous input settings to troubleshoot and cannot determine why the Schedule E will not produce a loss to be transcribed to the Form 8582. When I attempted a scenario in which the 2nd property was rented for the entire year, it created the loss as expected. Unfortunately, this scenario generated numerous additional questions concerning the depreciation amount and I cannot determine whether that played a part. Should I assume that I am missing a hidden tax rule and losses are not allowed in the year you convert a property from personal use to biz OR is this likely a system error? Any thoughts?

Re: Schedule E will not allow loss

Anonymous_ — Sun, 12 Nov 2023 18:48:26 GMT

There is no suspended loss on your 8582?

Re: Schedule E will not allow loss

AmeliesUncle — Sun, 12 Nov 2023 19:54:21 GMT

@mw291 wrote:
I converted the 2nd property from personal to rental property use in July 2022.

When it asks for the number of personal-use days and the number of rental days, say you used it ZERO personal days. If you read that screen carefully, it is asking for the number of personal days AFTER it was converted to a rental.

However, you will need to manually prorate the expenses (mortgage interest, real estate tax, etc.) between personal use and rental use.

Re: Schedule E will not allow loss

mw291 — Sun, 12 Nov 2023 21:54:33 GMT

You are awesome, thanks. I missed that.