Why is the tax return not limiting rental loss to $25,000? It is allowing the full loss that should be carried forward.

[TaxGuyBill]

Was the house sold?

Was there other passive income?

Did you check the box that they are a Real Estate Professional?

[Accountant-Man]

NMI.

Real estate professional?

[allie-mcwhorter]

There isn't any other passive income and the professional box is checked. I know that they should be limited to the $25k and not report the full loss of 51k. Any other thoughts?

[TaxGuyBill]

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@allie-mcwhorter wrote:

and the professional box is checked.

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If they are a Real Estate Professional and they "Materially Participate" in the rental, there is no limit.  They are allowed to take the entire loss.

So just double-check that they actually DO qualify as a Real Estate Professional.

https://www.irs.gov/publications/p925#en_US_2018_publink1000104591

[allie-mcwhorter]

The box isn't* checked and should not be considered a tax professional, but it's allowing the full loss. 

[TaxGuyBill]

Have you looked to see if you checked anything that makes it non-passive?