Once in service, expenses become deductible, reducing taxable rental income.This post does not create a CPA-Client relationship.

And the refinance is not a taxable event.

The market in Scottsdale is cheaper than the Seattle market to buy, however, the rental market is a bit higher, so we would likely be renting for around $6k-$7k/mo. 

But as far monthly payment you could easily buy a house in a cheaper location have less roommates and the same monthly payment or the same number of roommates and a lower monthly payment.

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I'm in Phoenix and obviously you can see that there are so many people moving from the west coast states out here to a cheaper and better weather market.

To defer all of your gain, you'll want to trade up in value, replace all the debt (meaning new properties have at least $350,700 of debt), and not take any cash from the exchange (this is boot which = taxable gain).As for replacement property, it just has to be real property - meaning it can be commercial, STR, land, etc!

You’d also make all future capital gains at least partially taxable instead of tax exempt by converting your primary to a rental.

Quote from @Basit Siddiqi: I personally would not buy real estate with a retirement account.There are just too many headaches that are not worth the potential increased return.Some headaches when it comes to investing in real estate with a retirement account1) LTV values are less and harder to find lenders.2) Potential to sell or partially distibute the property if you have to do a RMD(Required Minimum Distribution)3) If you run out of cash and have to make a major repair, you may be out of luck and have to sell.4) Having to potentially worry about UBTI(Unrelated Business Taxable Income)I would personally invest in stocks/bonds/notes with a retirement account.I buy deals with cash and use a ROTH SDIRA so there are no RMD's.I buy at huge discounts to retail.

Rather than paying for childcare services from a large organization, we found that it was significantly cheaper to pay for a second mortgage than to pay for childcare.