If I need to withdraw some owner's capital, which as far as I understand is not a taxable event, should I report it in Schedule E on tax return?

Assuming so, that leaves $30k taxable, on top of the $5k. 

@Justin MarshallUsing your IRA is possible, but there are several restrictions you need to avoid or your IRA could be disqualified and become immediately taxable. 

The way you structured this is probably the highest taxable way to do it.

The beauty of this method is that you get money out of the property WITHOUT it being a taxable event.

So if you sell you would not have any or much of a taxable event. 

A client with pent up passive losses will also sometimes strategically take cash enough to offset some passive losses.There are two times you can receive cash - At the closing of the sale your intermediary can identify the amount you want on the settlement statement and you get it at the closing - taxable of course. 

I got killed in 2018 taxes even with no TX state tax, so reducing taxable income this year (and going forward) is also part of the strategy. 

I'm hoping your agent is presenting you a blended policy or maximizing your paid up additions to be advantageous to you.Because you feel that you will be in the highest tax bracket the taxable equivalent yields may present well also.  

And pull that cash out.The refi cash is not taxable.