Here's a possibility: prior to the hammer, owner sold the property (actual cure) or provided evidence of an upcoming settlement and lender agreed to it (enforceable promise to cure)

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Well damn, clearly I need better guidance on tax planning... what are some ways to tap into those losses aside from selling?

Tax Benefits: Florida has no state income tax, making it an attractive location for investors seeking to minimize tax burdens.5.

If you do a search on BP, you'll see that there are several prior posts about PPR and you can read up on those posters' experiences.

I'm currently living down here but all my financials (assets, bank accounts, income, tax filings, etc) are in the US.

But you can still treat it as resulting in Ordinary Income even though it is reported on Schedule E, which lets you properly report in accordance with the tax results it seems you are shooting for under the tax return loophole.If your CPA is looking at switching it between schedules to get that tax result...it sounds like they don't understand the reporting position fully and/or they just don't know how to use their own software to address it.In summary, based on what you are describing for the situation, it should go on Schedule E, with what sounds like the resulting refund of $17k.

If I use reward points for the flight/hotel/rental car, am I able to apply the value of those points to my taxes for the travel?

There has been no tax benefits per se.  

I might be wrong but I am assuming the houses are also appreciating just because of the overall housing market trend but I believe the university is also expanding, thus increasing property taxes.