You got less taxable income. There's really a big difference between income and taxable income. If you receive $1,000 in rental income, the only taxable part if the amount is after your expenses. Since depreciation is an accounting adjustment to income but does not cost you cash like your other operating expenses, you get to keep more of that income without paying tax on it. That's a major reason people love having rental income.
Unfortunately, you do have to pay tax on that depreciation if and and when you sell the property at a gain. Your taxable gain is the difference between your cost and your sale price. Cost is lowered by the amount of depreciation taken over the years, so your taxable gain becomes larger when you sell. You really do need to take depreciation, though, because, when you sell, you get taxed on any depreciation you took, or COULD HAVE TAKEN. so, you pay tax on the total depreciation whether you took it or not. You are always best off to lower your taxable income each year by the depreciation amount.
Depreciation is a difficult concept, but it will become clearer the longer you own your rental
