rental deductibility question

Jan 08, 2012 1 Replies

I have a rental property.



My state offers a tax credit of up to a certain amount for repairs that lead to a lead compliance letter being issued.



How does this affect (if at all) the deductibility of these repairs on schedule E?



For example, assume the repairs cost $4000, and the tax credit is worth $3000. Do I deduct $1000 on schedule E (the difference between the cost and the credit), or do I get to deduct the full $4000?



It seems like "double-dipping" to deduct the full $4000, since my state is paying for $3000 of it, but I don't know what the rules are for this situation.



Thanks.


Suppose your state income tax would have been $10,000 without the credit; it's $7,000 with the credit. So you only get to deduct $7,000 of state income tax, plus $4,000 for repairs = $11,000.

Seth

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