Rental real estate is usually considered a passive activity. You can deduct losses from a rental property against income from other passive activities, but you generally cannot deduct rental losses against other income, with a few exceptions.

If you or your spouse actively participated in the real estate activity, you can usually deduct up to $25,000 of rental losses from other income if your modified adjusted gross income is less than $100,000. The deduction is reduced by $1 for every $2 your modified gross income exceeds $100,000. If your income is more than $150,000, you cannot deduct any rental losses against other income.

There are separate limits for married couples filing separately.

For details, search for Publication 527 at http://www.irs.gov.