1031 only option?

[Jacob Campbell]

I had intended to sell about $5.3MM of rental property and simply use the profits to may off debt on other notes.  However, I'm told my tax basis will be close to $2MM after depreciation recapture.  

Does anyone have any ideas on how to minimize that tax liability and still continue with my original intent, or is my only option a 1031 (I'm aware of DST but don't see that as a great option).

If so - any thoughts on rolling the profits from residential multi family sale into a commercial office building?   Is office still underperforming or is now seen as a safe investment again?

[Bill B.]

You can still sell. If your basis is $2M and you clear $5M after selling costs you’ll owe somewhere between $450k (all capital gains tax) and $750k (all depreciation recapture.). So you’d still have plenty of funds left to pay off debt. 

You can’t use 1031 exchange funds to pay off existing debt so a 1031 doesn’t really solve your problem. You could sell the properties with the problem debt instead? Refinance thsi property to pay off the other properties?