buying a home

What is the name of your state? new york state (new york city)
if i live in new york city and buy a home in either georgia or south carolina, can i still benefit from tax advantages in new york state?

[abezon]

Are you going to rent it out or declare it a second home?

i want to rent it out for a number of years, but what would be the difference?

[abezon]

Unless NY is really wierd, the rental house will benefit your taxes both federal and in NY. You will file a Schedule E and declare the rent received as income, then write off all expenses (repairs, management fees, taxes, mortgage interest, supplies, etc.) and depreciate the house and contents. If you buy the place, you'll have to designate how much of the purchase price was for the land, how much for the building, and how much for any furniture and/or appliances. You can't depreciate the land, just the building and contents.

Usually, by the time you take expenses and depreciation, you have a loss on Sch.E that carries to your 1040 and reduces your gross income. This reduction will also carry to your NY return and reduce your state taxes.

Now some practical advice: 1) You want to be able to get at least 1% of the purchase price as rent each month. This should give you enough to cover the mortgage and taxes. 2) You'll need a manager in Georgia to find tenants, deal with repairs, evict non-paying renters, make sure they aren't trashing the place, etc. A friend or family memeber is cheap but may not know what they're doing. Check out the Landlord/Tenant board for some ideas of what LL's and T's do wrong every day. A management company will charge you 6-7% of the monthly rent to do this. Be sure any management contract requires them to get your approval *in writing* for any repairs or improvements over $100 per month, and specifies that you are not responsible for repairs exceeding that amount without prior written approval. Some management companies will hire their own repair people and charge their clients the same price the LL would pay for any worker. You should try for a price break because the management co. has this person on staff and has little overhead for him/her. (The office and advertising are overhead for the management business, not the repair business.)

Good luck.