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.