My new client didn't file his 2019 tax return due to income lower than the filing threshold.    However, he had substantial rental loss due to water damage to the rental property.  Insurance coverage was not sufficient to cover his repair, not to mention depreciation and property tax expenses.

Will you suggest him to file a 2019 return in 2022 to secure the loss deduction?  What is the downside to file a late 2019 return at this time?  No taxes will be due except for late filing penalty.

Can he just add the loss carryforward from 2019 to his 2021 Schedule E?

Really appreciate your insight.