If you do not have a net profit from rents in 3 out of the last 5 years, then the property is presumed to be rented not for profit. In that case, you cannot offset excess losses against other income--only income from the property. You should see a tax professional, though, if you have questions.
This doesn't sound right to me. It sounds like what you are saying is that if you make a bad investment decision then you will be penalized by the IRS by not being able to apply losses against your other gains.