During the period of time the property was a rental, you were required by law to depreciate it. Basically, depreciation lowers your cost basis. In the year you sell the property you are required to recapture all depreciation and pay taxes on it. So it sounds to me like you took the depreciation as required, and then recaptured it as required. Thus, you have a taxable gain; not a loss.
Since you lived in the house as your primary residence (I assume) for at least two of the last five years you owned it, you qualify for the capital gains tax exclusion. Meaning you don't pay taxes on the gain up to $250K if filing single, or $500K if filing joint. However, recaptured depreciation gets taxed "no" "matter" "what", as it's not included as part of the excluded gain.
