Income tax advantage of real estate and section 8 tenants

[James Denon]

Hello everyone I am new to this forum and the income property investing.

I am trying to figure out the income tax situation.

I make more than 150K a year on my day job on a W2.

However, if I get a positive cash flowing property, meaning I don't report any losses, it should still provide me some tax advantages. Please check my math down here:

I assumed that the depreciation base of the dwelling is $200K.

Based on the math below, I would have $16,334 positive cash flow but I will pay taxes on NOI-mortgage interest-Depreciation=$13,569

OR since my income is >150K, will I still pay taxes on the NOI=31,000?

Feedback from experienced investors and CPAs appreciated.

Also, based on the cash and cash return, do you think this is a good property to invest in? It is all section 8 folks renting it. So, every 2 years, I should probably account for 10K of trashing the place per tenant which I have to pay for.

Price	320,000
Downpayment	64,000
Rental Income	56,000
Expenses
Maintanance	5,000
Water and Sewer	5,000
Snow and lawn	5,000
Insurance and Tax	10,000
NOI	31,000
Debt service	14,666
Cash flow	16,334
Deductable losses
Mortgage interest	10,158
27.5 yr Depreciation	7,273
Taxable income	13,569

[Dave Toelkes]

When your leveraged rental property generates a taxable income, you pay ordinary income taxes on that amount (not the NOI) regardless of your W2 income.

When your rental property generates a tax loss, your W2 income determines whether your loss can be used to offset your other ordinary income or carried forward to the next tax year.

My experience with Section 8 tenants is that they usually take good care of your place.  They know that if they trash the place, they can be held liable for the repairs AND they will get kicked out of the Section 8 program.  I usually don't experience annual turnover with Section 8 until their income disqualifies them from the program.  Even then, they don't always move out.  I have one tenant who started with me on Section 8, then after 4 years, her household income increased to the point where she was no longer eligible for the program.  She is still my tenant after 10 years.