Massive losses, no deduction. Can a CPA please say it ain't so?

[Aaron Rosenberg]

In 2023 my five properties across two single-member LLC's had 7 tenants just decide not to pay rent, and 3 roofs had to be replaced. Thank goodness for tax deductions, right? Before I was in real estate my business just bought stuff and sold it for more, so I know losses from a single-member LLC lower your AGI. Right?

Wrong.  I KNOW.  It goes against everything our books and meetings and articles and gurus say.  But TurboTax won't move my losses from Schedule E to Federal Taxes.  They say rental income is Passive and therefore ineligible.  I say depreciation, travel, and auto expenses aren't passive and those should at least count for something.  

Have I truly been screwed here?  Can I at least somehow carry the loss over to future years so I won't get taxed on future income?

[Michael Plaks]

@Aaron Rosenberg

Not screwed. Misled.

You cannot take them this year, but they are not wasted. They will be useful eventually, when you sell one of the properties or when you have passive income. Or when you quit your high-paying W2 job and become a full-time investor. 

Of course, I had to make assumptions: you're single, work W2 job that pays you over $150k, and your properties are long-term rentals. 

Resale business is taxed completely differently, and you're not supposed to have losses in resale actually.