Yes - passive losses carry forward year over year until you have a year where you do not have income as high or you sell.  

Market could go back to 2013 levels and if rents dropped way down too it might not cover the extra 200k debt service as well.Would it make sense to use the equity to pay off your other investment or does that make this much cash flow as well?

*shrug*By contrast folks actually residing here, that are here lawfully...Teach them how to hack FICO, they do exactly what they are told.Teach them to season funds, they do exactly what they are told.Teach them (or their CPA rather) what stuff we look for on Schedule E, make sure the rent and fair rental days are accurate, get aggressive with depreciation so no one is paying extra taxes for no reason, et cetera. 

Using your extra income does sound like a good idea, but just for a second, imagine this. 

You have extra cash that isn't getting a return, but you would like to put it to work.

We would think the lender would want them to come up with extra cash to cover the discrepancy between appraised price and their offer price, which could be as much as $25,000.  

I was in the construction business since I was 17 including those college years.Since I was in Texas and planned on staying there I found out that I was qualified to take a real estate broker license test without taking anything extra so I got a license, in 1980.  

I rent out a house that is totally paid for and I use the rent to pay for the mortgage of the house I am living in.I don't have any extra cash right now and budget is tight.That being said, what are my options for leveraging the paid off house to purchase another house?

The extra $70k is your fee, and he'll probably need to come out of pocket for that because a bank isn't likely to finance an assignment fee. 

It's almost like putting extra payments into your mattress and then pulling it out in 2044 and exclaiming that you have EXTRA money.