1031 Exchang with mortgage payoff and no new mortgage

[Leslie Yates]

! We are listing our rental duplex for sale and plan to do a 1031 Exchange into a REIT. We still have a small mortgage on the property but obviously won't have one on the REIT so my question is this: If we wait and let the mortgage get paid off at closing can we add personal funds to allow us to buy shares equal to our sales price to avoid the boot and paying capital gains and depreciation recapture? Is it better to pay off the loan prior to closing?

Is there anything I’m missing here?  We have the required intermediary but this is a first and for many reasons, we can’t take the income without affecting more financial issues than just taxes.