1031 for mortgage pay off?

[Tom Bud]

Hi BP friends,

I was researching 1031 exchanges and couldn't find a concrete answer to my question.

Imagine this scenario;

An owner bought a building at $350K with a conventional mortgage. Owner sells building for $1M, uses $200K from the proceeds to pay off mortgage. Owner has $800K left. Owner has another building in another state with a mortgage of about $800K left and wants to pay that off as well. Would a 1031 Exchange work here?

Thanks for any help,

Tom B.

[Patrick L.]

You must purchase replacement property with the funds, paying down a mortgage on another property does not count......the whole point of the tax break is for someone to make a new investment.