local window rebate

[LA100]

I received a Consumer rebate from the LA DWP for energy sufficient windows. I also seem to qualify for a federal tax credit. 

Do I report the rebate from the LADWP as income? 

[Opus 17 · Accepted solution]

No.  What you do is reduce the cost basis, when you go to sell your house.

When you sell your home, your adjusted cost basis is the price you paid for the home, plus the price you paid for permanent improvements.  Your cost basis is used to determine how much capital gains tax you may have to pay, so keeping track of improvements that increase your basis may reduce your taxes in the future.  In the case of an improvement with a tax credit (like solar, windows, efficient air conditioner, etc.) the price that you use to increase your basis is the cost of the improvement minus all your rebates.