Also see e.g. page 17 of the 1116 instructions for part I, line 2:
https://www.irs.gov/pub/irs-pdf/i1116.pdf
Line 2
Enter your deductions that definitely relate to the gross
income from foreign sources shown on line 1a. For example,
if you are reporting foreign business income on line 1a,
include on line 2 business expenses such as supplies and
advertising incurred as part of operating the foreign business
Unless you find more specific instructions for rental real estate, I think it is the same as a business for 1116 purposes.
The instructions of form are clear that Line 1 is the gross income. So you need to enter line 2 expenses to get to your net foreign income. (And then later TT will also take of a share of the standard deduction.)
Remember the 1116 is not giving you back the foreign taxes. Rather it is giving you back (at best) the US tax on the income the foreign country is taxing. Since US tax rates are so low, you almost always wind up paying more to the foreign country. But at least you don't pay twice. (Usually, but this is a very complex area.)
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