Multiple tax returns, worth the move to the Southeast?

Question

I'm a new investor, planning to move from New York to South Carolina to have access to the real estate markets of the Carolinas and Georgia. Say I live in S. Carolina, but buy a 4-plex in Georgia. Do I need to file 3 separate returns - one in NY (for the time I am still living here before the move), one in SC (new primary residence) and one in GA - or just 2, the SC and NY returns?

Also, what are the best single/multi fam rental markets in the southeast and is it worth the move?

Thanks for your input.

Also, what are the best single/multi fam rental markets in the southeast and is it worth the move?

Thanks for your input.

Account Closed · Answer

The house has passed the Mobile Workforce State Income Tax Simplification Act of 2012.  If this is enacted then an employee's state of residence will be the determining factor rather than where an employee works.

http://www.cchgroup.com/wordpress/index.php/tax-headlines/state-tax-headlines/all-states-personal-income-tax-house-passes-bill-to-limit-taxation-of-mobile-workers-income/

Account Closed · Answer

Sounds like you will have 3 state tax returns and a federal.

Michael Lauther · Answer

Rich: IMO the decision about where to live should not be determined by the investment opportunity in a particular area but the quality of life available for you and your family.

I invest out of my home area because I have calculated that the investment opportunities that fit my strategy are better elsewhere. The extra expense and travel are a small price to pay to live in an area that we love. If you truly believe the move will be beneficiary to  your life style and there are great investment opportunities than of course it is a win win situation.

Account Closed · Answer

Ali Young these people might never get caught.  Many things though can happen that might inform Cali that tax returns have not been filed.

The one most likely to do this is when the investment property is sold.  Another way is if they start accepting Section 8 tenants.

States are getting more hungry for tax dollars and they will likely become more creative in working with other agencies to locate the under-reporting of income.

Ali Young · Answer

Charles thanks for the info. I now realize that I know several people who are cheating the state of Cali. The moved to TX after retirement and rented out their houses due to the market crash awaiting the recovery.

J Scott · Answer

Don't take this the wrong way, but it seems a bit strange to be making major life and career decisions based on having to file (or not file) a single state tax return.  Keep in mind that you can probably find an accountant to file those returns for a few hundred dollars...if the move makes sense from a financial perspective, that few hundred dollars shouldn't matter.

That said, these decisions are highly personal, and I certainly don't want to imply that you're making a bad decision...just throwing out one more data point.

Rich C · Answer

Thx for your responses. With the possibility of 3 returns, I'd rather just wait til Jan 1 to move, at least getting one return out of the way.

Account Closed · Answer

Residency is a consideration, but is not the deciding issue of where you may have to file income taxes.

The major factor involved is physical presence.  Which can be met in many different ways.

Work An individual works in the state.  Doesn't matter that they live in another state.  Sometimes people may work in many states and will be required to file tax returns for many states.

Real Estate Real estate is a common way to create a presence within a state that will mean filing a state tax return.

Lottery or Gambling winnings There are any number of people surprised to find that they owe not only the feds but a state for winning a state lottery, winning the pot at a casino in another state, traveling to a game show and winning a prize.

Business Income This gets much more tricky.  Physical presence is the primary key, but not the only consideration.

Steven Hamilton II · Answer

As Charles Perkins said you will have to file each of those three returns. Part year NY and SC and a nonresident GA return.

It is not up to us to tell you if it is worth the move.  That is for you to decide if "the juice is worth the squeeze".  Moving is a big decision.  Are you leaving a job? What about family and friends?  You also have to do your own research to determine if you can compete in those markets.

-Steven the Tax Guy

Ali Young · Answer

I don't think you will have too. You would file 'out of state' income within your primary state not a separate state tax return because you are not a resident of that state.

Now I am not an accountant so please do consult with one based in your home state.

Multiple tax returns, worth the move to the Southeast?

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