Income tax shelter in primary home

[Tim Walsh]

I have been reading up on not having to pay tax on gains from a investment property if you use those gains to buy more property. Is that still true if you take the gains and put them into paying down your primary homes loan?

[Brandon Hall]

@Tim Walsh as @Andy D. stated, the strategy of rolling your gains into a bigger or more expensive property is called a 1031 exchange (1031 is the code section detailing the rules). You can 1031 investment real estate into new investment real estate. 

However, you cannot 1031 exchange into a primary residence. You could exchange into a rental and then later make it your primary residence, but going straight into a primary residence will cause the exchange to be disallowed and taxes will be due on the gains.