Do you pay capital gains taxes or ordinary but more painful income taxes. 

When you sell the property,  the depreciation taken on the separated personal property will be recaptured at ordinary rate vs max 25 % if not cost segregated.Also, you no logner can do 1031 exchange on the personal property after the new tax reform, so cost seg might not be ideal if you plan to do that in future. 

Capital Gains Tax Benefits: When an investor sells their interest in a real estate syndication, any gains realized on the investment may be taxed at the more favorable long-term capital gains tax rate, which is generally lower than the ordinary income tax rate.4. 1031 Exchange: Investors in real estate syndications may also be able to use a 1031 exchange to defer capital gains taxes on the sale of their interest in the syndication by exchanging the proceeds for a like-kind investment property.

In a 3 BR it would be a no-brainer but not here. 

Short term vs. long term is not easy to determine as your might be considered a dealer and income might be ordinary not capital gain.

However, when you're in the business of private lending, this portfolio income is most likely reclassified as ordinary business income. 

Also the current administration is talking about changing long term gains to ordinary income. 

Your standard deduction was $25,900 plus the negative AGI of $80k, means you could have “forced” $105k of ordinary income to your tax return(best is probably a Roth Conversion) with $0 of tax liability.

What exactly is tax deductible and is income taxed at my ordinary income rate?

Capital losses offset capital gains, and once capital gains are eliminated up to $3k of capital losses may be deducted per year against ordinary income.