Sold rental house in 2016. Have a large carryover loss. It will offset gain, depreciation recapture and my salary and more. Can I take IRA distribution to use the rest?

[Hal_Al]

I think so. A capital loss, on the sale,  goes on form 4797 and line 14 of form 1040; rather than schedule D and line 13 of form 1040. Line 13 losses are limited to -$3000, but not line 14.
Thanks to SweetieJean for pointing that out providing this link <a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Selling-Rental-Real-Estate-at-a-Loss/...>

If you are asking about disallowed passive rental losses from previous years, see TaxGuyBill's answer.

[Hal_Al]

Deleted

[SweetieJean]

In lieu of taking an IRA distribution, consider doing a Roth conversion

[TaxGuyBill · Accepted solution]

Yes.  The Passive Loss Carryover can offset any other income (the Passive Losses will be reported on Schedule E and flow to Line 17 of your 1040).

However, as SweetieJean pointed out, unless you need the money from the IRA, you may be better off converting it to a Roth IRA to 'create' income'.

Otherwise, if your total income is negative (Line 41 on your 1040), it would create a "Net Operating Loss" on your tax return, which could be use to amend prior tax returns, or you can make the election to carry it forward to use next year.