[SavedintheCity]

Look into what's termed a 1031 (or tax free) exchange. You can sell real prop, purchase replacement real prop in a 90 day window and not pay any capital gains on the transaction. However, any "boot" coming out, that is, negative difference in asset price that will be returned to you as cash at the end of the transaction will be subject to capital gains tax. This section only applies to commercial real property, but there is a tax device for residential as well as I recall. Ask your accountant.

A quick note on tax avoidance:

Millionaires pay thousands of dollars to accountants and attorneys to construct elaborate transactions to reduce tax exposure. However, the cost of doing so is often close to 5-10K. So for a million dollar transaction that works out to .002-.01%, but for a transaction much smaller than that the fees don't change (the complexity is the same), so it comprises a much larger percentage of the asset value. So for a 100k property (non primary residence), it is not worth avoiding the capital gains tax on it (even if you purchased the property for $5,000.00). For primary residences there is a tax floor of (I think) 1million (I can't remember if it's absolute value or 1 mill in capital gain, hopefully someone else does). That is, if your primary residence is worth less than 1 million (again I think this is right but am not 100% sure) you do not pay cap gains on the increase in market value.