I don't see anywhere in Pub. 544 where it states that a loss on Section 1250 property is treated as a capital loss subject to the $3000 a year limitation. From everything I've read the past few days, it appears to me that losses on the sale of rental property are treated differently from gains. Gains on the sale of rental property are clearly capital gains, with the portion involving depreciation recapture possibly treated as ordinary income. But losses on the sale of rental property seem to be treated as ordinary loss not subject to a $3000 per year limitation.
Unfortunately, publication 544 is long and complex, and the topics aren't necessarily laid out in an organized and logical manner. Can someone knowledgeable about this document point me to specific pages and paragraphs that indicate that a loss on rental property is anything other than ordinary?
