I am not sure how to word this question...

[whoisjohngalt]

here is the situation: we bought a house in Dec (settlement), but actual move is in Jan - to a different state. We were renting before.

1. Do I have to fill out two state returns for 2010?
2. For federal return - I should be able to write off my closing costs and pre-paid interest and property taxes for 2010, correct?
3. Anything else I should know??

Thank so so much

Lena

[TheOtherMe]

Did you move to new state in 2010 and have income? If so, two state returns will need to be filed.

Most closing costs are added to the basis of the property and are not deductible.

[whoisjohngalt]

No, we are physically moving in 2011. I understand about closing costs, but what about ppd int and property taxes? The income will still be coming from the first state, as my DH didn't change his job and will not.

Lena

[mwcpa]

"Do I have to fill out two state returns for 2010"
If you "earned" income in that state, yes... but generally, merely owning a real estate does not create the need to file in the second state

"I should be able to write off my closing costs and pre-paid interest and property taxes for 2010"
closing costs are NOT a tax deduction, in general...but some can add to your cost basis...

real estate taxes paid at close are deductible, but money paid to fund a bank escrow account to pay taxes are not until the bank pays the taxes to the local government
prepaid interest is deductible, provide it meets the mortgage interest requirements, and should be reported on form 1098..... be careful to not double dip it....