Tax treatment of a sale of an overseas inherited property

[Matthew J.]

I inherited a foreign rental property from my parents in 2017 and started renting it out in 2018. It was empty for a year. We never lived in or visited the property. I sold it in 2020 for a loss based on the appraisal we got in 2017. What would be the tax treatment of this sale?

My tax software asked me “Enter the percentage of this asset used for business purposes”. What should be that percentage?

I have seen two different camps on the internet. One camp says losses offset the capital gains first and the remaining losses offset the ordinary income up to $3,000. The other camp says losses from sale offsets the ordinary income only. Which one is correct?