There are multiple questions related to tax and financial advice. Let
me explain the situation in detail. Figures, dates and other info used
in example are not real but close enough.

2005 : Living in CA as renter. Visited NC in mid 2005. Liked NC. 
Booked 2 under construction (SFH) homes. Let?s call them Home-1 and
Home-2.   Single income (90k) in 2005. 2005 Taxes not yet filed.
Standard deduction(planned).

2006: Home-1 will be ready by April 2006. Home-2 will be May 2006. I
will be moving to NC in March 2006. Will be closing (finance) both
homes in April and May 2006.

2006 projected income: From salary 90K for husband and 40K for Wife.
Plan to rent home-1. Rental income from Home-1, projected as 24K.

Home-1: SFH  price 300K.
Home-2 :SFH  price 300K.

Finance position:  Saving  200K.To be used for down payment for home-1 and home-2.

General Plan: Relocate to NC (from CA) in March 2006. Complete the
finance for home-1. Close the deal. Move in by March end. Live in for
1 month. Arrange for all the home appliances (washing machine,
Refrigerator etc.). Complete the back yard, window furnishing. Rent
the home from April 2006 onwards. Complete home finance for home-2.
Move in by April end and live for at least 2 more years at Home-2. 
Sell home-2 after 2 to 3 years (2009). Move back to home-1 in 2009
end.

Other Info: Home-1 has good schools and better rental opportunity. Home-2
has great floor plan and better appreciation opportunity. We don?t need
good schools till 2009.

Financial Approach 1: Minimum debt possible. Take minimum total loan.
Pay down payment as much as possible. Don?t know how to invest in
stocks.

Financial Approach 2: OK knowledge in stock investment. Can grow fund at 8% a year.

Financial Approach 3: Very good knowledge in stock investment. Can
grow fund at 20% yearly.

Loan approach 1: Both homes will be financed by company A. 6% fixed
rate for 30Y. (for simplicity, ARM not considered. Comments welcome.)

Loan approach 2: Home-1 financed by company-A. Home-2 financed by company-B.
 
Question 1:  Having more than 20% down payment (60K each), how should
I finance both homes with financial approach 1 i.e which home should I
take more loan on? Why?

Question 2: financial approach 2 for question 1?

Question 3: financial approach 3 for question1?

Question 4: Consider loan approach 1. Do I need to declare home-1 as
rental property and home-2 as primary residence (proposed) while
taking loan?. Are there different interest rates for both just because
one is primary residence and one is rental?

Question 5: Loan approach 2 for question 4.

Question 6: Can I deduct Rental income from home-1 from interest paid
for home-1 loan? How about money spent on appliances, backyard, window
furnishing, etc are Deductible? what else is deductible?

Question 7 : Relocation expenses that is spent in 2005 (visit to NC
and moving of stuff) and 2006 (moving car and moving of stuff) can be
deducted as itemized deduction in 2006 tax filing?

Question 8: In 2009 when I sell home-2, how much tax I have to pay on
the capital gain? What if I plan to sell home-1 in 2009 i.e. capital
gain tax on home-1 sale? Note that I am living in home-2 for 2006-2009
as explained in general plan.

Question 8 : Please suggest fair price for this question. Depending on
the detail answer, information I could get, I am willing to pay fair
amount. Also suggest fair price I should expect to pay on tax adviser
for financial planning, including 2006 tax filing.

I am more interested in direct answers to these questions, though web
links are alos appreciated. Might not find time to read and understand
all links. Any other advice that you can offer for tax/financial
planning for the situation explained above?

Any recommendation of a good tax consultant in NC Raleigh is welcome.
I do plan to use a tax consultant for 2006 tax filing and prefer to
seek appointment for financial planning in early 2006. Answers to
above questions will help me understand better. Just like knowing your
car is good before taking it for repairs to mechanic.*smile*

Any good book recommendations, that explains tax planning ?with
examples? is appreciated. Please note that i am seeking a financial
advice for the situation explained above. Questions asked above, just
reresents information in what area,I am looking for.

Thanks,
gavmandava-ga

Pertinent information you left out:  1) income 2) do you have a
contract for both homes 3) are you preapproved for a mortagage 4) what
can each house rent for, realistically, 5) what are the real estate
taxes?  To name just a few.
I do not know of any advisor that would recommend that you buy two
homes right off the bat in an area you are moving to.

First off, this is so a $200 question. Indeed, it's a series of
questions you would pay a tax attorney a healthy initial consult for.

A short term flip can be dangerous. Besides, if you have a positive
cash flow (front and back end) and the property is appreciating, why
sell? Also, I prefer to play with other peoples money and finance the
bejeezus out of my purchases. Liquidity allows me to move quickly or
pay off the debt as I wish. Just an opinion.

Let's look at some of your questions in reverse order.

Question 8 (the first question 8, that is) cannot be answered until
the gains are determined. If you want to minimize gains, there are way
to do it. If you want to make a large profit, there are ways to do
that as well. Often they are mutually exclusive, especially with a
short term flip. Which house you live in and when will have an effect
on deductions.

Question 6 you've got backwards; you never deduct income from an
expense. Interest is deducted from rental income. Eveything related to
the operation of the business of renting the property is a deduction
(subject to IRS rules), even mileage to go to the hardware store for
items to perform maintenance on the property. Robert Bruss has written
a couple of good books that touch on the subject.

Question 4 is asking if you should be honest with the lienholder. If
you fib to them and they find out, your tushy is gonna be in a world
of hurt. Lenders will find out you are buying 2 properties-- this is a
public transaction-- and can inflict serious damage on you for fraud.

Question 1 (and all the others) is why you need a tax attorney. He or
she will be worth whatever you need to pay-- mine is about $400 an
hour-- and will protect you from common problems as well as from
yourself.

Congratulations at making this purchase. You should be well rewarded
if you are patient.

I think I can be helpful, but you will eventually need some advice
from a CPA/tax attorney.  I am a national mortgage lender who has
owned investment property. I also have an MBA, an accountant
undergraduate degree and spent over 15 years in corporate finance.  I
will answer some of your questions, but in random order.

1. You want to put 20% down on each house, as this will avoid costly
mortgage insurance required on loans over 80% Loan to value, or a high
rate 2nd mortgage.
2. You can purchase both as owner occupied homes, since you intend to
live in each. However, you can not apply for 2 owner occupied homes at
the same time. Since there is time between closings, as soon as you
close the first loan, apply for the 2nd.  The interest rate on an
investment property loan is generally about .25% or more higher.
3. Financial Approach. Where are you sure you can make more money?  It
is pretty simple, if you are paying interst of 6%, and you know you
can make more than 6% in the market, you leverage as much as possible,
and put the difference in the market. But remember, your higher
payments with a larger mortgage require montly cash returns, while
your earning in the market are unrealized until you sell.
4. Expenses/Deductions.  Any expenses associated with your rental
property is tax deductible. Expenses include operating costs and minor
repairs. You also get depreciation on the value of the structure.
Capital improvements (new roofs, furnace, etc.) are added to the cost
(or basis), and are recovered through depreciation.  I hope this is
helpful. You can go to HTTP://gregorydwyer.blogspot.com if you want
more information.