Instead, property owners should start talking with their heirs about getting into the real estate business, as a step-up in cost basis on any real estate bequeathed to them would no longer allowed under current proposals debated in Congress. Under a step-up basis, heirs pay gains only on the amount of increase from the time they receive the property to the time they sell it, rather than when the donor purchased it.

"You're probably going to start talking about doing like-kind exchanges on a continuing basis," says Lee Horakleroad, tax partner and head of the real estate group in the Chicago office of Ernst & Young. One solution may be exchanges into net-leased credit-tenant properties, he suggests.

While Horakleroad suggests real estate professionals may want to lobby against that element of the tax proposal, many taxpayers' crises may be an opportunity for brokers. "Those in the trade business have just found a bonanza," says Jeffrey Rubenstein of Much Shelist Freed Denenberg Ament & Rubenstein.

On the plus side, proposals being bandied about include allowing brownfield remediation costs to be written off as expenses a permanent provision, rather than expiring after 2003. "It's not worth the risk to the developer without knowing the provision will be out there," Horakleroad says. Voluntary contributions of property to conservancy districts would entitle donors to write off 50% of the capital gain as long as the property was held for at least three years, Horakleroad adds. And Congress may extend the research and experimental tax credit, says Chuck Foster, senior managing partner at McGladrey & Pullen, which could help those who develop proprietary software for their real estate business or creative construction methods in their development projects.

Otherwise, proposed credits for using renewable energy sources are limited to personal residences, and new tax credits are being proposed for developers creating single-family units. However, new or rehabbed condominiums and cooperatives would qualify in the Single-Family Housing Tax Credit, which would operate similar to the Low-Income Housing Tax Credit that has spurred multifamily development.

"Low Income Housing started off slow and really has developed into an industry," Horakleroad says. "This could develop into something, too, in the future."

Meanwhile, Rubenstein warns the Internal Revenue Services is threatening to investigate deals involving fractional interests in properties to determine whether they were indeed tax-deferred trades or taxable transactions. And he disputes US Treasury Secretary Paul O'Neill's assertion that eventually the current tax code will be replaced with a flat tax, consumption tax or scrapped altogether. "None of that will happen," Rubenstein says.