Jason,I think its a nice idea to think about the tenant because turnover cost and rent loss can eat you up if the PM isn't doing his job.

That's a big paper loss, but does not mean that the loan will be called due.  

So there is a 1600/mo loss in income.

In insurance terms, this is called "mitigating the loss."

I just became aware of a situation where a family friend and her mother have offered to short sale their home with no regard to loss of their initial $20K down payment and damage on their credit due to the fact that they're up in age (one is over 100 years old) and they see no other recourse.How can I advise them of a different strategy to resist the temptation to give away what is essentially a really nice home that needs minimal TLC in the Oviedo FL area?

My custodian told me that if that's the case,  get insurance in my name and list the IRA custodian as a loss payee. 

If a PM has to call a licensed contractor for every drippy faucet and paint repair the landlord will be hurting in no time.Have had terrible experiences and significant financial losses due to  PM misdeeds.

The approach that Jeff M. mentioned with Actual Cash Value can be a path to take if you are only concerned about total losses and you wouldn't rebuild on the lot, but purchase something else instead.

Could the 2013 loss be carried over to 2014 and offset some of the gains?

=Ointriguing, at loss for better civil words. until now, i've never ever heard of the government's replacement property following eminent property proceedings referred to as a 'GIFT'.