I’m assisting a relative who is a non-resident of California with their taxes and need help to understand the treatment of losses from their California rental property.
Due to losses in 2023 from the rental house, that year their Federal Schedule E line 22 deductible real estate loss was $-1300. This loss was fully allowed on their Federal taxes, helping reduce their W2 income, so no Form 8582 was generated in TurboTax and there was no Federal loss carryover to 2024.
After factoring in California adjustments from differences from Federal depreciation of the rental house and related assets, the CA 2023 rental real estate loss was $-1500, which is also the same amount entered on their CA Form 3801 Part III Line 11. As they had no other CA income, their CA AGI was also $-1500. Because they had a negative CA AGI they had no tax due to CA on their 2023 return.
However it seems to me that as there was no other CA income to offset that year there should have been a CA loss carryover to 2024. I can’t find evidence of that on their 2024 return I’m assisting with and am wondering if this is due to the loss being fully allowed on their 2023 Federal return? Is there a way to create a state carryover to of the 2023 CA loss to 2024?
