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@hcliston wrote:

 

You both said that Real estate taxes and mortgage interest are allowed to create a deductible loss.

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In some cases yes.  But due to court case a few years, ago, the rules changed a bit depending on if a taxpayer itemizes or not, and if the SALT limit applies.

One of your later comments seems to indicate that your client is subject to the SALT limits,  If I remember correctly, that essentially means the interest and taxes on your 8829 are less likely to create an allowable loss.

Read the Instructions for Form 8829.  Some of the expenses may go on lines 10 and 11 (which can create an allowable loss), but other expense go on lines 16 and 17 (which can NOT create an allowable loss).

https://www.irs.gov/instructions/i8829