.- I am aware of my 1031 options should I want to sell and defer taxes beyond that 3-year date (and would need to continue to do so until death if I wanted to avoid those taxes instead of just defer them). - I believe the current rental situation I have is better than the property warrants.

I defer to the others with more experience than I, though.

The property was in horrible condition, pet odor, lots of deferred maintenance etc.

If you offer a bonus based on profitability will deferred maintenance increase because they want a bonus?

The property was in horrible condition, pet odor, lots of deferred maintenance etc.

They would get that $500K tax free and the rest of the tax would be deferred in the 1031.A very elegant solution that puts $500K tax free in their hands now. 

8. 1031 Exchanges: If I sell one of my properties, what steps do I need to take to defer taxes using a 1031 exchange?

For example, if tax minimization is a priority and you're already maxing out your employer sponsored 401(k)s, you can look at deferring self-employment income through SEP IRAs and an individual Defined Benefit Plan. 

Always use a property manager to keep your real estate investments as passive as possible and keep you compliant with Fair Housing laws.This way you can learn to manage the property manager and learn from experience as you go.If you buy a bunch of properties all at once, they may not all fit your buying criteria, there may be deferred maintenance that needs to be dealt with all at the same time, and you will not have accumulated the management experience building your portfolio one at a time.To Your Success!

I'd make sure just how much extra tax benefit will open up for you annually compared to the cost of the study.You are exactly right - a cost seg will get deferred in a 1031 exchange as long as the property you are purchasing is roughly the same components of things that were cost segregated.