Advice for negative cashflow Airbnb

[Allen Vance]

Ok, so I'm new to BP and I'm probably posting in the wrong place. I appreciate your patience. 

I live in Los Angeles and a couple of years ago I bought a tiny homestead cabin on 5 acres about 2 hours away in the hi-desert of California near Joshua Tree National Park. I did it for several reasons: 1) My fiance and I really enjoy the desert and the cost was low (or so it seemed at the time) 2) I expected I could Airbnb the place when not using it and, if not profit, at least break even 3) It was all I could afford (or at least I thought I could afford it at the time). The cabin itself turned out really cool and it rents for around $250 a night on weekends. I use a local management company that takes 30% off the top of the Airbnb income, because I can't really do it remotely. 

Anyway, the purchase price was about $40k and I ended up spending about $100k on top of that because it needed everything. I really went overboard (being new at this sorta thing) and probably overpaid for goods and services.  After everything was said and done, I was able to do a cash-out refi last year for about $95k with a conventional mortgage, and I consolidated the rest of my debt with a short-term personal loan. I now owe about what it appraised for ($145k) and my carrying costs are way higher than what it's bringing in after expenses. 

So...selling looks like my only option at this point, but I'm worried about capital gains. I'd rather keep it, but don't know how to structure the debt in such a way that it's even possible. Also, as if the above wasn't enough, there's an encroachment issue that makes it not as straightforward a sale as I would like (which is probably how I was able to get it in the first place, because the market is/was hot). The neighbor is aware of the issue but not too motivated to grant me an easement, which means I'll probably have to pay her through escrow if I can find a buyer willing to stomach the defect. 

So that's it in a nutshell. What would you do? I welcome any input/advice/abuse/consoling!