Rental never rented

[David Weaver]

After competing against cash offers, we secured a property to fix and rent out. Over a year later and 90k in fixing up the property, we have a very nice house that we've had some rental activity on, but not as much as we like. Most likely we will have to drop our price to secure a renter. We also received some interest in selling our property (which really would probably be a better fit: large house for the area-1900+sqft., 4 beds, well-done renovations). 

Can anyone direct me to information pertaining to selling a house that was intended for a rental, but never rented? It's only 5 blocks from our primary residence, so I doubt it will qualify as a second home, which means we will probably get nailed for the capital gains. Would we receive any preferential tax treatments (deducting mortgage) for this sale?

Thanks in advance. 

[Jassem A.]

Renters can be pretty price sensitive. Sounds like you may have spent too much on renovations.  I would advertise it better and maybe drop the rent price if there are nearby homes of a similar size renting for less.