As a former landlord for nine years, this is pretty correct. I did the tax deferred exchange thing once. Then I sold for cash (a pretty big no-no in terms of r

As a former landlord for nine years, this is pretty correct. I did the tax deferred exchange thing once. Then I sold for cash (a pretty big no-no in terms of real estate investing) because I didn't enjoy such a concentrated risk. When I sold, there's something called depreciation recapture. If the 27.5 year depreciation thing was used to offset your income taxes, part of your gains gets taxed as ordinary income. The cost basis of property is also lowered so that the capital gains is higher. There's also tax trick called cost segregation that lets you depreciate certain parts of your property at an accelerated rate. Basically, as the OP says, keep doing the 1031 exchange until you're dead and your heirs don't have to worry about depreciation recapture.