Losses on Real Estate Rentals

Form 8582 should show the unallowed losses that will carryforward.

Some/a lot/all (in some cases) of the LOSS is created by the non-cash deduction of depreciation.

Real Estate, historically, appreciates in value.

That increase in value, when sold, will be subject to a lower tax rate than your client's ordinary income.  The suspended losses will be used to offset that ordinary income (as the ordinary income tax rate).   Unless/until tax laws are changed again...

Historically, rents go up over the years (reducing the loss) and can eventually (if the property is held long enough) result in a positive cash flow but a tax loss due to depreciation.

The *reward/make money* off of investing in real estate is a long term strategy.

There ya' go - Cliff Notes version of why to buy rental real estate. 

And it can all fall apart if RE prices go down (think 2007/2008 cycle)  OR if a variable mortgage is used (rather than fixed).  

And, the impact of cash tied up in the rental (down payment plus covering the monthly negative cash flow) vs that cash invested elsewhere (MMA, CD's, Stock Market, etc) has to be factored in.