As far as primary housing, its very easy to find affordable, nice houses with relatively low property tax. A

Put good cash on cash with 25% down and have high quality and low headache type properties.Someone that has 5 million down and gets 15% coc is 750,000 pre-tax a year.

Pete and I pay that apartment license tax as well as a launderette/employee tax.

If we were to sell we would qualify for avoiding capital gains tax as we have only been renting out the property for a year and I was living there prior to getting married.  

However, a while back there was legislation to allow homeowners to avoid this phantom income tax. As

All your profit from the sale of a flip is ordinary business (active) income (reported on Schedule C if you are not using a business entity), and further subject to payroll taxes in addition to your ordinary income tax. As

You can buy a replacement property with your 1031 exchange and defer all tax as long as the investment portion was worth at least as much as you sell. 

If I set up an LLC, finance the bigger house to pay off the smaller house, could I transfer the smaller house to the LLC to increase the depreciation without a siginificant cash outflow, while protecting myself in not having to pay back a capital gains tax as part of the 5/2 rule?

Hello,I am a RE professional with some experience in Boston(MA), Sao Paulo(BZL) and now working out of Panama, Central America for the past 3 years.I just want to put myself available for questions about Panama and meet people interested in living and/or investing here.Cheers!

Neither one has a state tax, as far as your obligation to your state, I would recommend contacting a CPA in your state.