And I don't believe it has an inflation adjustment attached to the $1M threshold. 10 years from now the $1M will be worth a lot less, yet we're still taxed at ~40%.

Finally, there is a lot of discussion about the possibility of an increase of inflation in the short and medium term.

Inflated property valuations, poor communication and subpar returns.

Just as in many flips, ARV tends to be inflated and rehab costs seem to be underestimated.

On the demand side, do you see inflation causing lower incomes to lift / debts to effectively have less negative value / credit ratings improve and therefore seeing people qualifying for first homes?  

Average Morgage rate in 1980 was about 16.5% average last yea was around 3% if you borrowed 800K at 3% interest you pay 24K the first year in interest if you borrow 100K at 16.5% that’s 16,500 officially which I believe to be understated the inflation amount since 1980 is 240%. so the interest equivalent for 1980 for a house would be 39.6K in interest compared to 24K today or around 40% less expensive for a loan.

Is it common practice to inflate like that the amount due to the seller?  

Cut the supply in half, and rising prices were the only logical outcome.Now in addition to an inventory crisis, we have an inflation crisis with material costs increasing immensely and quickly, which will and is leading to further price increases.

Inflation in the building materials sector is especially pronounced right now-maybe worse than in the 70's.

You're not building a full house so the inflation that's hitting the lumber markets wont affect you like a builder.