Your taxable income from a rental is:actual collected rent - actual expenses - interest - depreciationActual expenses are the things you spend money on that's deductible in the year you spend the money.

This makes sense only if your not planning to buy more rentals.By extending the term to a 20 or even a 30 year amoritization, not only will your montly debt service decrease, you still have the option to make a higher payment when you have adequate cash reserves.Also, commerical loans tend to have higher rates, so you may be better served with a residential mortgage.

The forgiven debt then becomes taxable income on the tenant's next tax return.  

Let me just answer your question using taxable income.  

I am trying to determine if I can garner any tax advantages if I source from a taxable account.

My numbers don't meet the "rules" but my decreased costs, vacancies and self manAgement.

If you've owned any for over a year, and you can make or have made improvements to increase value substantially, a 1031 exchange can help you do this with no taxable event -- i.e., buy for $100k, improve for $50k, sell for $250k and buy two more properties with the proceeds (or a four plex, or whatever -- a higher yield in exchange for your lower yield.)

I received the 2009-2012 tax returns today, rents received have decreased every year and losses have increased.

This is where double entry accounting becomes useful (albeit still confusing at first).Your mortgage payment would increase your 'owners equity' account and decrease your mortgage balance.

Property taxes in the areas I invest in are 2.5% - 3.5% of the 'assessed' value, and increases/decreases each year/every other year.