I have read and listened to numerous discussions about the tax advantages in the world of real estate investing, but I have two questions that I haven't gotten a great answer to. Maybe some more experienced investors out there can clarify for me:

1) I constantly hear about Depreciation as a tax advantage. I understand how that works--and how it can be helpful in each individual tax year, but I never hear anyone talk about the reality of Depreciation Recapture. Doesn't the Recapture essentially reverse the benefits we've had each year with Depreciation?

2) This last tax season was our first since buying our first rental property. I expected to get all sorts of deductions, but was told that because we make too much money we cannot claim deductions on our rental investments this year. It was explained that the deductions WILL defer to a future year when our income falls below the IRS limit (I think it was $120,000 in net income or something around there--I can't recall now the exact figure.) Does that mean that the only investors out there who are getting to deduct rental expenses are all making less than $120K each year?

Thanks in advance for any clarification on these two topics!

-Mark