I had a similar case where I had a house that was "underwater" (mortgage higher than current market value). What I did was to rent it out for the necessary time (1 year?) so I could claim the house as rental property. Then, when I sold the house, I claimed the house as a business loss and took the loss as a capital loss.
Not exactly the right way to do things under the Standard Rules of Accounting. I should have listed the purchase price as the fair market value when the house was converted from personal residence to income property. But I forgot that rule when I filed my taxes that year.
BTW, anybody who does not study and learn the IRS tax code and relies on an tax preparer to fill out the necessary paperwork, will loose a lot if money. Professional tax preparers, whether Accountant or bookkeeper, will always bend the rules in favor of the IRS. If you do your own taxes you can a) find a lot of loopholes and b)always claim you didn't understand the regulations.