Not necessarily a scam, maybe someone trying to save fees. 

The city is still getting property taxes. 

This is tax free. 

I have a followup question - I will realize a lot of capital gain from this home in Idaho, so I think unless I purchase a new primary residence I will have to pay that capital gains tax. 

You need to have the income and tax liability to support the depreciation.

You are hopefully getting good cash flow, appreciation, mortgage paydown and tax benefits.   

Where to get the most recent and accurate data for things like:Unemployment dataPopulation growthJob diversity and top employers in the areaVacancy rates (eg huduser.org)Property taxes and jnsurance costsI saw bp pro and reventure and a bunch of other websites provide some of this data, but i wonder how accurate and recent it is.

We’re fortunate to have an above-average income and live well below our means.This summer, we’ll be moving to Detroit (PCSing in August), and we’ve saved about $120,000 to invest in addition to having funds set aside for the home we’ll purchase in Detroit.The reason I’m posting is that I’m struggling to decide how to best allocate the $120k.

STR seems to have better tax benefits (in the right market) but is it worth it at a distance ???

To defer all tax you must purchase in total at least as much as your net sale.