I have heard that those investments provide sizable tax deductions (e.g. 70-100% of the intangible drilling costs are deductible in year 1, and all tangible drilling costs are deductible over a 7 year depreciation schedule). 

If she has lived in the property for two out of the past five years she can avoid capital gains taxes.

What happens at 6 years that boosts your cash flow  $200/month?

There’s so many things to think about when choosing one or the other: cap gains tax, holding costs, closing costs, selling costs, marketing cost, PM fees, etc.  

Regarding the first sale - you're responsibility to defer all tax would be to purchase at least $200K of investment real estate. 

That said,  council has been fairly quiet lately on rental issues,   perhaps because they were all focused on the seattle head tax debacle, and also I think they are starting realize it wasn't just threats as they see a lot of smaller owners selling.    

Plus...escape velocity...Episode 113 – Jay Papasan - Very practical slow and steady adviceEpisode 221 - Tim Shiner - his concept of equity build up and "shearing the sheep" shows some of the flexibility of real estate vs a 401k Last but not least, I also recommend all the tax advice given by my fellow CPAs on the BP Podcast.

The income the tax advantages the appreciation the liquidity of the asset the ability to retire safer etc., explain that bad things happen primarily by getting bad tenants as a result of poor screening .

hi @Oz Radianosend me your questions and I will do my best to answer, I have my tax certificate from the IRS and also I am well experienced dealing with foreign investors...

Or do you have to pay the tax on all gains regardless of whether you spend that money on building a new home?