Who are you selling the property to? What is the value of the property? Is this a legitimate sale or will you still have any benefit from the property?
The IRS will not stop you from selling a property for $1,000. There is no rule against it. However, how the loss will be treated is determined by who you are selling the property to.
If you are listing the property on a for sale by owner site to a complete stranger that does not count as a related party to you, and are going to sell it for $1,000 even when the value is $25,000, then yes. You can do this and you would still be able to claim the loss on the sale of the property. The loss is deducted against your ordinary income. You may also be able to go back and amend your returns from the prior 2 years to claim any additional loss from the sale and any extra that is not used, you can carry it forward for up to 20 years.
If however, you are selling the property to your son or another related party, then you can still sell the property, however, you cannot claim the loss on your taxes. IRC §267(a)(1) specifically disallows you to claim a loss on a sale to a related party.
If you are selling to a related party, the loss that you cannot claim, will also affect the losses they may or may not claim if they decide to sell the property. For example, if you sell the property to your son for $1,000, but your basis in the property is $50,000. The $49,000 loss you are selling it for can only be used to offset any gain your son would then receive when he sold the property. If he puts more money into the property and then sells it to Rita down the street at a loss, he cannot deduct that loss either.
Selling Rental Real Estate at a Loss
Net Operating Losses (NOLs) for Individuals, Estates, and Trusts
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