If you calculate a loss on the sale of your rental property, the loss (calculated on Form 4797) is an ORDINARY LOSS and not a capital loss.Capital losses can only offset capital gains (except for the allowable annual $3,000 deduction).Ordinary losses can offset all forms of positive income and can even generate a net operating loss.Please find an accountant who knows how to calculate the gain/loss on the disposition of the property INCLUDING deducting any suspended losses on rental property that were previously not deductible due to higher levels of income under IRC 469 (under passive activity rules).