Handling principal payments & depreciation on a non-cash flowing property at tax time

[Mark Sanchez]

Hi all!

If I had a rental property with exactly zero cash flow at the end of the year (after paying for mortgage/escrow/insurance/maintenance/etc.), would some of my depreciation expense shield the funds that were used to pay down the principal balance portion of my mortgage? If not directly in accounting terms, perhaps in a roundabout/in the big scheme of things way?

In this situation with exactly zero cash flow, since the funds used to pay down the principal balance portion of my mortgage would come from rents collected, it seems logical to me that some of my depreciation expense would shield those funds, rather than 100% of my depreciation expense carrying over into the next year.

Thoughts? And thank you in advance!