Can I sell half my rentals and use the money to payoff the others without paying tax?

[Jack B.]

As in, is there a tax loophole here to avoid capital gains? I know of 1031 exchanges, but this is a bit different....

I took money out of some of my rentals a few years ago to buy more. Wondering if I sell some now and use the money to pay others off, is there some little known way of avoiding the capital gains in this case, similar to how the 1031 does...?

[David M.]

@Jack B.  Doing straight sales, not really.  Cash-out refi is just a way of accessing your equity. You have to pay interest for it, but you can access it.  The IRS doesn't really care what you do with the proceeds from the sale.  The transaction creates a realized gain/loss so you have capital gains and depreciation recapture to worry about a it relates to your cost basis.

You couldn't even 1031 them "together" since you have to buy as much as you sold.

What are you proposing that is a "little bit different?"

Good luck.