[BrokeAssMillionaire]

Why not ask your sister? She probably knows everything unless she has tax advisor ...lol...

I don't research anything that I don't need so I only focus with Primary resident issue.

I used to offer 5k-50k below the asking price in order to wait for counter offer for 2 years. Then I gave up. However, in 2012 I got a hook up with realtor agent that happened to be my old friend, that's where she 's on my side to help with counter offer. If you don't have a good agent, they don't really care if you can buy it or not.

The key is primary resident is waive capitol gain tax of 250k for single and 500k for couple. So no matter how she keeps trading the new rental property, she would have end up with tax when she no longer own any rental property. Even her kid inheritance rental property, the kids have to convert the rental to primary and live over 2 years to get away from tax.

Trading new rental property is complicate. I don't really know much.  I think you have to announce new rental property in 45 days then close out in 180 days but there is still tax issue. I have other job, this is not benefit for me, no time for it.

Case 1
Let say she sold a rental property at 450K when she bought for 100k
-Bought 100K
-Sold 450K
-Gain 350K
-Got a new rental property for 500K (cash 50K + 450K)
-Tax: 450k - 100K(initial invest) - 50k cash = 300k < tax
---Short-term gain tax (less than a year own) = 10-37% whatever total with other income
---Long-term gain more than a year = 15% or 20% depend on your income

-If you don't want to pay tax on 300K gain, you want to get 800K new property....That's what I guess, I may be wrong.

Case 2
-Bought 100K
-Sold 120K
-Gain 20K
-Got new property 140K (120k + cash 20k)
Tax: 120k - 100K - 20K = 0 --> no tax

Most people are into case 2 with it may be your sister.  Case 1 is pretty rare that only happen in 2002 and 2012. And I am happen into case 1. 

Note: I am not expert, you have to do more research because I only focus on primary issue so I know more about it. Tax would apply even you put it as a vacation home.