Loan officers are often not the best at explaining taxes. You don't actually increase your taxable income through depreciation. What happens is you get to deduct an expense that doesn't really cost you any money during the year, so your taxable income from the rental decreases and you pay less tax on your rental income.
Line 24 of your Schedule E makes perfect sense.
Line 25 is not actually your real loss, it's your deductible loss. With real estate, losses up to $25,000 are deductible if your OTHER income is less than $100,000. Did you add any additional income when you amended?
