They remain distinct on Form 1040 with different tax treatmentOnly capital losses can offset capital gains (except for the $3,000 allowance)So even though material participation makes the loss non-passive, it's still an ordinary loss that cannot offset capital gains from stock sales on the return.The only way capital losses can become ordinary is upon the sale of your property, and that loss could offset your W2 salary.  

First - Have a discussion if the rental loss will immediately help your tax situation. 

Not sure if I'm doing something wrong but the map here used to shaded in terms of the filter selected (i.e.

The losses would have spiraled out of control for me had I not been able to sell my second house immediately.I don't look back on my experience with any regrets since I know the risks we take playing this game. 

It appears some of you are giving off negative shade here.

There are also other new construction homes on our street facing the same issue.So, I’m kind of stuck with this property, which is why I’m exploring ways to cut my losses and exit cleanly.

(As AZ and your current state will fight over who gets to tax your gains with the federal government.)I have to throw most of the shade on your horrible tax guy/cpa who didn’t tell you renting it out was a $50-$100k mistake. 

The way I interpret the following policy clause is that so long as the property is defined as other than "VACANT" which is the case when the property is being "constructed, altered or repaired", the 30-day time period and vacant status does not apply in this instance: We do not insure any loss at your premises if your dwelling has been vacant for more than 30 consecutive days immediately before the loss and the declaration page indicates an occupancy other than “VACANT“.

I stay away from curtains as they can get dirty easily but I update the shades themselves to something nicer (plantation or shutter like shades or good quality roll down shades - black out in the bedroom).

It outlines profit and losses from rental real estate.