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I have understood that they do a gross-up, with cash, to cover the taxes - (a) value of the house divided by the tax rate less (b) the value of the house is paid in cash.

The last house was valued at $1.5 million, and came with $500 thousand in cash for a total of $2 million (plus an SUV). Ignoring the SUV, that comes to 25% in cash which goes a long way to covering the taxes but not all the way.
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