1031 C-Store to Air BnB

[Karen Chenaille]

Hello! I have a convenience store for sale. I run an Air BnB out of my primary residence renting out 4/5 rooms. Therefore my primary residence is being used for a commercial venture. Would it be possible to use a 1031 exchange to use the proceeds from the store to pay off the mortgage on the primary residence?

[Bill Exeter]

Hi @Karen Chenaille, 

Unfortunately, no.  The payoff of a mortgage or debt is not considered to be a purchase of real estate and will therefore not qualify for tax-deferred exchange treatment.  You would have to actually acquire an interest in real estate that you do not already own.