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Well, as it stands now, any loss on a second home would not be deductible at all, as losses on any personal use property is never recognized for tax purposes.
Unfortunately, turning the property into rental property won't solve the build-in capital loss that you have now either, as if you convert the property to rental property, it's tax basis becomes the lower of your original cost or the fair market value at the time of the conversion. However, converting the property to rental property has other advantages, namely that the rental income can offset the operating costs of the property, depending of course how much rental income you are able to generate. The mortgage interest plus real estate taxes are already deductible on your Schedule A for Itemized Deductions.
One other thing I'll mention is that captial losses are only deductible against ordinary income (such as retirement fund withdrawals) to the extent of $3,000. per year in excess of any capital gains, so those losses may not be "use against" the other income you mention from 401-K, IRA's, etc., as that income is ordinary in nature when it comes out of the retirement funds, so that income would be subject to the $3,000. limit previously mentioned.