My wife and I just recently purchased a house that we some day plan to rent out. The house needs some fixing up and CLEANING up from the previous owners. The yard and house both was full of junk. Can I claim my and my wife's time for clean up efforts on my taxes? What all else can I claim when it comes time to start remodeling and later renting it out?

No, you cannot claim your time. Only actual expenses, which includes any materials and the mileage.

As for what else you can claim, in short: any and all expenses that were incurred that are directly related to the property:

Utilities, materials, contract labor, mileage, phone use, etc.

Check out IRS Schedule E for a list of stuff and how they categorize it.

Actually, the expenses and rental income are reported on Schedule E, NOT C.

Wooooops, of course! My fingers were working overtime.

Indeed, it's the Schedule E, not C. I corrected my post above.

See attached below.

You can not claim any expenses including remodeling expenses till the house is ready for renting. The are all capital expenses; they will increase your cost basis.

"ready for renting" in my experience, is a debatable topic.

I can consider an apartment ready for renting even if it needs a lot of work...

Nothing is an exact science on this issue...

As far as I'm concerned and I've been advised locally (and I will welcome and encourage comments or disagreement from our Tax Experts); if I own it and there's a roof and there is running water and heat, then it's "rentable".

I expect our tax experts will correct me if I'm wrong here, but what you should do is setup a company (Inc or LLC) to purchase the house. You can then bill the corporation for any expenses (including your time) in repairing or maintaining the property.

Billing a closely-held corporation or LLC for your time if YOU are the owner is related-party activity will draw the attention of the IRS.

Such related-party transactions draw such IRS attention because they are subject to massive abuse by the owners.

Ooopps