"...if my annual depreciation over 27.5 years is $8000 per year, and my federal income tax from an hourly job is $8000, I would owe no taxes?"
NO. You're mixing your apples with your oranges. The depreciation is an expense that gets subtracted from your rental income, (along with other rental costs), to come to a net rental income or loss. The effect on your taxes is the amount of the rental income or loss times your marginal tax rate. For sake of argument, if you have a net rental loss of $8,000, (and can actually use that loss on your income tax return; that's a function of your gross income), and a marginal tax rate of 24%, that saves you $1,920 in taxes.
