Rent income in another state

Forum|Forum|3 years ago
April 10, 2023
2 replies
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I have rental income in another state which is Utah for the first time. Turbotax asked what portion of my federal rental info applies to Utah. It's a negative 3k. It feels like, I might be doing something wrong filing a negative tax return. I figured it would have me run through the rental income and deductions again but it didn't. Maybe Utah follows the federal way of doing it and that is why but not sure.

PatriciaV

Employee

Even if you had a loss for the year, 100% of your rental activity came from Utah. TurboTax will handle the transfer between your federal and state forms based on your answers.

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Carl11_2

Employee

It is perfectly normal for long term residential rental property to show a loss every single year. When you add up the deductible expenses of mortgage interest, property taxes, insurance and the depreciation you're required to take, those four items alone will usually exceed the total rental income received for the year. Add to that the other deductible rental expenses (maintenance, repairs, etc.) and you're practically guaranteed to show a loss every year. Once you're rental expenses gets your taxable rental income to zero, that's pretty much it. Excess losses are just carried over to the next year. You'll see them on the IRS Form 8582-Passive Activity Loss Limitations form.

Because of changes in tax law starting in 2018, if you meet the requirements (most do) then up to a maximum of $25K can be deducted from your other ordinary income. If you qualify (you probably do) then you won't see any unallowed carryover losses on the 8582, if that form is even generated.