You may own rental real estate that you need to sell at a loss. To help ease the pain, losses from selling rental properties generally receive favorable tax treatment.
First make sure you actually have a tax loss
The recent housing slump has reduced the value of most every form of real estate. You might be looking at loss if you have to sell a rental home any time soon. To determine if you have a tax gain or loss, you will need to compare the property’s sale price to its tax basis. The tax basis is generally your original purchase price, plus the cost of improvements (not counting expenses you’ve deducted as repairs and maintenance), minus any depreciation deductions you claimed while you owned it.
Source: Selling Rental Real Estate at a Loss
My comments: This is really importance stuff since I am contemplating getting rid of a piece of property…