Negative Cash Flow Impact on W2 Income Taxes

[Aashrit Luthra]

Hi all. 

I'm looking to buy a new construction home in CA for $750,000 as an investment property (around 8% interest rate) with 20% down. The rent I can expect is $3200. This would surely put me in negative cash flow of $2000/month. I'm relying on appreciation of the house to make up for it in the long-term. I'm assuming appreciation rate of 6% in Manteca, CA. First of all, does this even sound like a good investment strategy (going into negative cash flow)? How do investors currently invest in this market when interest rates are so high then?

Secondly, I make above $150,000 / year in my w2 job. Can I use this negative cash flow as property losses every year to reduce my taxable income, or not since I make over $150,000? Does it make sense to rely on tax implications / benefits to justify this as a good investment?

Thirdly, if the losses can only get carried forward to selling time when I realize capital gains, then isn't there the rule (i forget the name) which allows you to sell, and buy another house within few months, and hence you don't have to pay any capital gains on the first house? If that's true, then what benefit does the property loss from the previous years even provide (if you can just avoid capital gain by buying another house immeditately)?