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I think this is actually a very real problem. What would happen if I could sell one investment and immediately buy another investment vehicle and not have to pay taxes till I transform it to something that's obviously not an investment. If done right this should just make the market more efficient because it prevents lock in.

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This is possible in some circumstances with real estate - it's called a 1031 exchange, and you can sell one piece/set of real property, roll the profits directly into purchasing another piece/set of real property, and not owe capital gains taxes on the profits from the first sale, although they will be owed if you eventually sell the second set of properties for cash.

In California, and across some counties, you can also move your lower property tax assessment thanks to prop 60/90[1]

[1] http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#1

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