I have been toiling over investing in DST 1031 Exchange vs cashing out by paying capital gains.

you need a business partner create a bizz plan and go hunting for a capital partner any sane lender would never do this. 

They typically don't have a balance sheet per property which your tax professional will need (tax basis for each property including land, building, CapEx, capitalized loan costs, accumulated depreciation, accumulated amortization, etc). 

I read somewhere I could 1031 the portion of the property that I’m renting (ADU), and pay capital gains tax as normal on the portion I’m living in?

Occasionally you'll come across a good deal that you can capitalize on

Repairs vs. capital expenditures.Find out how long the provider has been doing cost segregation studies and how many they have performed.

I don't think you are going to find equity partners with that kind of capital on the terms you are asking for. 260Mil @ 10% equity gives you a company valuation of 2.6B.

This way they have a good cashflow, a lot of credit for capital gain due to capital improvement and a forced appreciation of your asset. 

Perhaps lower if it is a rental, as renters are not known for maintenance of capital items.

Hello all,I need clarification on capital gains tax.