Will I be able to take foreign tax credit against my USA income tax for the income tax paid in Spain?
Yes. If I recall correctly, that's done outside of the SCH E. @M-MTax check me on this please.
Under the deductions & credits tab in the section for Estimates and Other Taxes paid, there's a sub-section in there for foreign taxes paid. For the total foreign taxes paid you include not only taxes paid on the income, but other taxes such as any foreign property taxes also.
I'm not sure if you have the option to also claim these taxes on the SCH E. But if you do that option and do claim foreign taxes on the SCH E, then you can not claim them in the Estimates and Other Taxes Paid section under the Deductions & Credits tab.
