@Tom HallAt 7% if you can I would pay it down as investing it net after tax gains may not get you the 7% you are paying - so it’s less riskDownside is you lose liquidity of that money as it’s tied in your propertyIf rates come down in future you can refinance and even take some of the cash out.Regarding your question are rates coming down, a lot of factors come into play but right now it does not appear there will be significant changes to rates over next 3-6 months.

@Kezia Edmonson, it's all about the valuations as @Jon Taylor mentioned.In your 1031 exchange you must purchase at least as much investment property as you sold in order to defer all tax. 

Luckily both sites collect the taxes for our place.Our little town did implement a 1% tax that I have to pay separately.

Using an insurance and bank loan product, putting $500,000 each year for 10 years so your family gets $2mm tax free each year forever.  

Shouldn't be any extra taxes involved.

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

Keep in mind that property owners have experience significant hikes in their costs as well (property insurance and property taxes). 7.

It seems that investing in improvements while I still live in the home wouldn't be tax deductible.

You mention tax benefits.

@Claude Diehl,You don't need a CPA or tax expert here; this is a straightforward transaction.