You have to report your rental income as income, which will probably offset your rental expenses, such as interest and property tax payments.  It is true that you can take depreciation expenses on your rental property.  But you have to recapture these deductions and add it back to your cost basis when you sell your house.  The recaptured amount will be classified as ordinary income.  So your depreciation deductions on the tax return is only a deferral.  You will eventually have to pay taxes on them.