Rental Math Questions

[Jay Thacker]

Hello Bigger Pocket Gurus,

Silly question on rental math from a newbie: Can i deduct <property management fees, home structure depreciation, maintenance costs, interest expense, home insurance, property tax> from rental income before paying taxes or no? I thought i could but a friend just told me that i couldnt benefit from losses till i sold the house for a gain. Very confused now.

Mathwise, say 

(A) Rent = $100, <Total of expense buckets laid out above> = $80. Taxes = ~35% of $20 net income = $6?

(b) Rent = $100, <Total of expense buckets laid out above> = $80. Taxes = ~35% of $100 net income = $35?

Is it (a) or (b)? 

Thanks in advance!

Jay