1035 Exchange propery that was a gift and now a rental

[Daniel Forte]

Hi guys, I have a single family property that has been and is currently used as a rental, but was gifted to me by a close family friend years ago. It currently cash flows $200.00/month, but that is without a mortgage(it's paid off). I'm wondering if I could 1035 Exchange it with a more suitable property. Is there an issue cause it was originally gifted to me, and wasn't purchased by me for investment purposes? I really am trying to get around the capital gains on a 80K house. Thanks for any help. Dan F. NewB. Rochester Ny