A California taxpayer owns property in Colorado. They file a Schedule E, which has a federal loss. As their AGI is under 100k they get to take a loss, so page 1 of 1040 has a loss for rental, which reduces their W-2 income. On the Colorado return, they would have negative income (no other Colorado source income). Is it possible for them to elect to carryover their Colorado loss to a future years, but take it for federal?
No. Colorado's tax scheme uses the federal data. You use the first 14 lines on Form 104 to compute your CO taxable income as if you were a resident. Then you complete the 104PN to determine the percentage of federal income by category that is CO sourced. If your CO source income is negative, your tax rate is 0. There is no provision in State law for CO carryovers. CO uses federal carryovers.
owns property in Colorado. They file a Schedule
But this means that the loss is wasted on CO. Which is particularly strange because if your AGI is high (over 150k) you don't get to use the loss, and this means that the loss is available for future use on both federal and CA and CO returns; but if your AGI is low then you must use the loss and it is useful on federal and CA return, but not useful on CO. So this law discriminates against the poor, and I find hard to believe the tax laws would do this.
owns property in Colorado. They file a Schedule
I don't think you are going to find too many Coloradans concerned about those poor Californians with rental property in CO who don't pay any CO tax.
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