This is just "rough" and I'm not going to get into the details of marital status, filing status, and income thresholds. But generally:
If you have $25,000 loss on rental property *after* getting your taxable passive income to zero, that remaining $25K can be claimed/deducted from other ordinary taxable income. However, if that "other" income is say, $20K, then you can only deduct $20K bringing your total tax liability for the year to zero. The remaining $5K of loss is carried forward as a passive loss carry over. You can't decide to take a lower deduction against your other ordinary income. The rules don't allow for that. Just because the rules don't address it directly, doesn't make it legal.
However, if you want to do that then by all means go ahead. More than likely you'll end up in tax court in about 3-5 years over it. Then it would be very interesting (as well as definitive) to see how the tax court rules. Once there's either a clarification of the existing rules, or a decision handed down by a federal tax court, that will end any and all discussion on this and settle the matter once and for all.
