Does net rental income factor in depreciation?

[JR C.]

I was looking over the health exchange website and one of the income questions was Net Rental Income amount. Does net rental income factor in depreciation? Or is depreciation a different type of expense because you have to pay it back upon selling the property. My Schedule E includes depreciation of the rental as an expense relating to taxes but it doesn't specifically call it Net Rental Income. With depreciation included, my income is much lower. Anyone know for sure?

[Edward Synicky]

Not an accountant so always check with a professional. However depreciation is not related to net rental income. Depreciation is the cost of the investment minus the land cost. Then for residential property you divide that amount by 27.5 and deduct it every year. Depreciation will first off set any positive cash flow making that cash flow not taxable income. After that if your GSI is under 100K you can further deduct an amount up to 25K from your W2 salary. If you make over 100K the 25K goess away incrementally and is gone when you have 150K. And yes depreciation is recaptured on the sell of the property, easily avoided by doing a 1031 exchange. Hope that is not too confusing.