When I'm calculating this deal, do I subtract the tax credits up front, so that I'm estimating a $144,000 renovation?  

Take the gross rent and subtract the mortgage (principal and interest), taxes, insurance, any utilities you will pay, and an estimate for repairs & maintenance.  

After subtracting utilities, the principal/interest is slightly more than 50%, which means slightly underwater.Basic ROI: Pass. 

Pull your comps from cash sales or some other metric to determine what investors are paying, work backwards from there by subtracting the cost of the work needed, and the profit/equity that the purchaser will expect and determine your number.  

If you are subtracting off for initial poor cash flow it was not clear in your post.  

Then subtract the estimated Rehab, Closing and Holding costs from the ARV to determine the max offer price.  

If you want to be a REI, base your numbers on facts...not guesses.Here is what you need to see if your market works:Actual rentsActual taxes/insurActual cost of a propertyActual cost of rehab...and, most important, the Actual Cash Flow you want to make when all the expenses are subtracted from the Actual rents.1%, 2%, 50%, etc..."

Then subtract what is being paid against the principle. 

If so, would I subtract what is left on the mortgage from the ARV?

From this you would subtract your repair estimates (73,300) leaving you with a purchase price of $157,000.