What happens if you lose on it, you now have an additional liability, not just a loss of money.Are you planning on keeping the current property or exchanging it (1031) into something else?

@Hitanshu ShahDon’t expect to recover losses—it’s usually not worth the time or cost.

The owners of 100+ unit complexes are not individuals who will be swayed to sell by a good offer or the need to cut short term losses.

That can be a draw back if the market is on a mad run up tho.Also, I would always have enough in a heloc to cover your 401k loan in the event of job loss or if you quit your job. 

I have been with a property management company for 2-3 years in Arizona and the property is being run continuously at a loss.

Apparently, not only did they sell at a loss, I didn't get any money back at all and they claim I owe them an additional $40,000 for "renovations" despite no work being done to the building at all. 

They are now selling resulting in a 100% loss for investors. 

Can you take the loss without completely ruining your finances?

You should fire them right away and talk to an attorney to prevent the loss, but I wouldn't expect much and it could be a waste since a company that does this will not have the money to do anything.When you have just one unit and you are looking for PM companies, your options are the bottom of the barrel because it's not a good use of the big one's time.

Keep in mind the more you write off the less money you will show as you net.If you have (2) full years and depending on how the accountant files your taxes you will have a schedule C more than likely or another schedule that shows profit and loss.