Options to capture an investment loss in my underwater las vegas home

I own a home in Colorado which is up $300k and I want to eventually retire there. I am renting and depreciating it.
I own a home in Las Vegas which is down $300k and I have been renting and depreciating it also.
I rent a home in Washington which the owner bought for $200k more than it is currently worth. I love it and want to live in it for the next 5-8 years.
My question: My landlord wants to swap my vegas home for their WA home since both homes are currently of equal value. I will gladly do it but I do not want to just give up on my loss since I am depreciating it nicely now and it covers my gain in CO.
I would appreciate your creative ideas for a path forward like: create a LLC which both of us are 50/50 owners, transfer the homes into the LLC with the LLC renting each home out and then dissolving the llc in 10 years which each of us taking the other house at that time.


First you did not supply enough information as Washington and Colorado are big states! 

Now Las Vegas is a fairly large area and likely your Las Vegas home will make a bunch more money in appreciation long term than 80% of Washington State.

If you like the home in Washington buy it with 3.5% down on an FHA purchase since you would like to live there another 5 years. I am assuming these are not multi million dollar homes!

I would not be in a hurry to enter into an agreement which does not benefit you long term!


1031 exchange. defer the loss.

1031 exchange is not available to you when the replacement property is to be used as your primary residence.