Net Losses are a good thing.... Right?

[Mason Jeffries]

So I am preparing to buy my next(second) investment property. After providing my tax documents to my lender they see that I took a net loss last year on my current rental. Which is good for taxes right? Here's the rub... the lender says they wont use the rental income to help qualify for my next purchase because of it. They can only use the profit I made after deductions. Which in this case was "nothing". 

For example if I had a STR that nets 40k per year, but after deductions and depreciation I was left with a taxable income of 10k per year. The lender would only use the 10k as income to help qualify for the next one?

Am I understanding this correctly?

[Chris Mason]

It's not quite that simple. Depreciation is added back, for example.

If there's a net loss, they only count the net loss against you. Not the full PITI.