Walk me through how taxes work

[Dan Griffin]

Hi,

Can one of you walk me through how taxes work on an investment property?

Let's assume the following. 50k property.

Income - PITI = $910 in cash flow for the year

Rental income - (Interest expense + depreciation + insurance + property tax + cleaning/tenant turnover costs) = $456

So my tax deduction is $456 (saving me about $146 in taxes)

So do I then pay income tax on the $910 in cash flow or do I not since rental income was part of the tax deduction equation?