it depends on the loss. is the loss computed taking into a/c the depreciation taken? was any portion of the say the house cost $50K and you took $10K in depreciation. if you sold it for $40K net of selling expenses or less there would be no recapture. any amount between $40K and 50K there would be recapture up to the amount of depreciation taken.
if you couldn't deduct all the depreciation due to the business income limit, then the depreciation to be taken into a/c would only be the amount you actually deducted.
