When calculating a loss, you need to modify the calculations. If it was converted to a rental in December 2014, you use the LOWER of (1) the Basis at that time (usually the purchase price plus cost of improvements) and (2) the Fair Market Value as the starting Basis. Then you adjust that Basis for things like (1) improvements after the rental conversion and (2) depreciation. That is the number you would need to determine if there is a loss or not
