1031 Exchange vs rental mortgage paydown

[Steve Testori]

Howdy all - first time poster here, and thanks to any who offer advice.

I own several rental properties (one in NJ and two in AZ), and am preparing to sell one (NJ). I’m weighing options regarding the proceeds. Here’s what I’ve come up with:

1) Using a 1031 Exchange to buy another property in AZ and generate more income, as well as continuing to enjoy the tax advantages from rental investments 

2) Skipping the 1031, paying all the taxes - capital gains, depreciation recapture - and using the net proceeds to pay down one of the AZ rental mortgages in hopes of having it paid off sooner so it creates better cash flow

I’m 59, anticipating retirement in three years - all of my finances are in good order with no debt outside of the rental mortgages, own my home outright. I’m a bit wary of taking on more debt at this stage of my life, but do like the idea of not leaving thousands on the table - the second option is appealing in it’s simplicity and keeping on Uncle Sam’s good side.

Thoughts/insight? Am I overlooking anything?

Thanks again for any input -