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And those "rising" tax revenues? Stay less than 2 years and you pay tax. I've seen dozens bought and sold just in this rather small Glendale, AZ development, that is less than two years old. $$$$

Think of all the GDP and tax revenues the free money that is circulating creates.

Besides the post-1997 250k individual/500k joint principal residence exclusion, real estate investors have the option of employing Section 1031 "like-kind" exchanges to defer taxes. I wouldn't go hog wild in any tax revenue estimate.

As an aside, I am surprised so little discussion regarding exuberant real estate prices have focused on the effect of Section 1031 exchanges. Combined with the principal residence exclusion, these rules are discouraging marginal capital from leaving the real estate market.

The cherry on the top is the AMT, which punishes sellers of substantial assets benefiting from a long-term 15% tax rate by shifting them into a new, higher tax system.

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