question on taxes, depreciation, and positive cash flow

[Steven Veenker]

Hi, I'm new to this, we're looking at getting our 1st rental, one of the questions I keep trying to find an answer to but am having no luck is about taxes. I know you can depreciate your rental over 27.5 years, but everything I read says that any positive cash flow you have over the depreciation is what's taxable. I understand that part, but what I don't get is what is considered positive cash flow? I know what positive cash flow means but is that pre or post paying the mortgage? I only ask because that's a big difference. I mean with a $150K home, that means I can only make just about $5,000 w/o being taxed in a year. If that's pre mortgage there is just no way.