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Essentially, for someone with no postive income form the rental, is the sole benefit of carrying depriation losses forward that of offsetting appreciation gains when time to sell, creating a wash?
OK. It's real simple, so don't try to make it more complicated that it should be.

1. You own a "rental property" and you have established your "basis" (the cost of the property less the land portion) when the property is put into service (this is a private home turned rental, not a straight investment purchase).

2. You rent the home for the market rate. This is your income.

3. You then have expenses, such as insurance, that is totaled up on your schedule E.

4. You have a fixed annual depreciation amount that is calculated on a 27.5 year term from the "basis" number you established. (I won't get into the other property in the home that can be depreciated at a different "schedule - i.e. term).

5. You add ALL these numbers together, and IF, it is over $25,000 you carry forward the amount over $25,000 (think of it like a safe deposit box and it's Sunday and you can't get in the vault - it's still there) into the future until 1 or more of many things happen where you can use that "carried forward" amount. {you have less than $25,000 in deductions on the schedule E, you sell the property, you do a 1031 exchange,, etc. etc.)

6. You subtract (dollar for dollar) the amount up to $25,000 from your normal taxable income - your work money. This reduces your tax due. This is very important. You are paying less tax.

7. This $25,000 high limit is adjusted DOWN as your taxable income goes up, at some point you cannot deduct any of the $25,000. You are now carrying forward $25,000 or more. I am carrying forward over $50,000 in "losses" that I can apply when appropriate.

These LOSSES have been generated by my tenants paying my mortgages as the property value goes up while I have leveraged my down payment to create the losses (paper) and gains (appreciation).

This is rental property income / losses / benefits.

I know that this is a simplified outline and there are many nuances and situations that can substantially affect the outcome and the benefits. Each deal is different. Each tax benefit is different. etc.

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