Can I just lump all income together (day job plus rents) and all deductions together (primary home plus LLC/rental property deductions), even if the rental deductions by themselves exceed rental property income?
The short answer is no.
The Longer Answer
First, to clarify a question @edralph brought up. In the US, expenses related to mortgage interest, private mortgage insurance (PMI), and property taxes from your primary residence can be deducted from your personal income tax liability. The principal portion of your mortgage cannot be deducted. Home owner's insurance is also not an allowable deduction.
The reason you cannot lump your expenses from your business rental property with your other income (and expenses) is because the IRS treats income (or loss) from rental property as a separate income category. The IRS considers rental property as a passive activity, and income/loss obtained through renting as passive income. The income from your day job is non-passive. The IRS will not let you mingle passive and non-passive income.
This means that you cannot simply deduct those rental expenses from your wages. You can, however, deduct them from other passive income. If your passive expenses are greater than your passive income, you should be able to carry the leftover amount forward to the following year's tax return.
You can talk to an accountant about this, and/or read the IRS instructions for Form 1065 and Form 1040.
Page 10 of the 1065 instructions under Passive Activity Limitation states:
In general, section 469 limits the amount of losses, deductions, and credits that partners can claim from “passive activities.” The passive activity limitations do not apply to the partnership. Instead, they apply to each partner’s share of any income or loss and credit attributable to a passive activity.
Because the treatment of each partner’s share of partnership income or loss and credit depends on the nature of the activity that generated it, the partnership must report income or loss and credits separately for each activity.
Generally, passive activities include (a) activities that involve the conduct of a trade or business if the partner does not materially participate in the activity and (b) all rental activities regardless of
the partner’s participation.
The passive activity rules provide that losses and credits from passive activities can generally be applied only against income and tax from passive activities. Thus, passive losses and credits cannot be applied against income from salaries, wages, professional fees, or a business in which the partner materially participates...
