Your profit or loss results so far - your net loss

[chapinreyes]

I completed entering all pertinent rental info.  After the next couple of sections, i got the following (see screenshot) and it is the first time I see a negative (-) and it shows me I can deduct zero.  Can anyone help me understand why this is?  Thank you!

[LeonardS]

What it is indicating at this point is that you do not have a loss on the property and have nothing to delete.  These values will change when you have completed all the information on your rental property.  This is just a "snapshot", not the final value.

[chapinreyes]

Hello LeonardS,

I just about completed entering all the information and it looks like I have a net loss on the rental property.  What does this mean exactly? Does this mean, the income I am getting is overall less than the expenses I had last year?   In other words I am negative, on the red?

[ColeenD3]

Yes, you had a loss. But, this is common with rental property. You may not have spent more than you made, but depreciation usually creates a loss. That is the beauty of rental property. It reduces your other income.

[chapinreyes]

Hello,

But the net loss, what does this mean?

[JulieS]

Net loss on a rental means your income is less than your expenses and your depreciation,

For a typical rental, you may have a positive cash flow, if income is more than the expenses that you paid. In many cases when you add the depreciation deduction, it become a net loss. 

For example, say rent is $1000 per month and it was paid timely all year. Gross income $12,000. 

Your expenses, mortgage interest, property taxes, insurance, etc. total $8532. 

Your cash flow is income $12,000 - expenses $8532 = $3468 profit before depreciation. 

The depreciation deduction on a typical $150,000 rental is about $5400.

$3468 profit before depreciation - depreciation $5400 = ($1,932) net loss.