Capital Gain Tax Defer 1031 - Invest in Existing Owned Property

[Andrew White]

I’m selling a rental investment property I solely own (Property 1). I would like to avoid (uhmm...defer) capital gains tax by investing profits in another rental investment I own (Property 2)...basically reduce principal on current debt owed to bank, and this Property 2 is also more expensive (which means technically putting toward higher debt).  My question:

[Option A] Can I utilize the capital gain defer rule by simply re-financing Property 2 and applying (investing) Property 1 profits toward Property 2 principal?

[Option B] If Option A is no, can I re-purchase Property 2 under an LLC, (so technically it's a new investment purchase) and defer capital gain taxes from Property 1?

[Option C] Uncle Sam has me cornered, and I’m paying up now?