@Jim Cummings, The only thing that would be different in a 1031 scenario is that if you sold the free and clear property you would have more cash proceeds you have to reinvest.The requirements to defer all tax are to purchase at least as much as you sell and to use all of the cash. 

Most look at the current figures and don't take into account all the deferred maintenance which includes deficiencies. 

Purchase price: $50,000 Cash invested: $25,000 Sale price: $125,000 3 separately metered units, each 1bd/1ba cottage, on single tax parcel with heavy deferred maintenance.

However, I would defer to a Lender in this forum as to the benefits or negative consequences of doing such a thing (or even if it's possible)- I'm not the money person here, but I do like to negotiate!

I see mold, leaking roofs, broken ACs, and other deferred maintenance regularly. 

@Vic Caldwell, No reason to do a 1031 inside your SDIRA because it is all tax deferred anyway. 

@Bernadette Andrews, If you want to defer all tax on your 1031 you simply must purchase at least as much as your net sale. 

In order to defer all tax you must purchase at least as much as you sell and use all of the proceeds.

Currently, the property has little to no deferred maintenance and is prime for renovation and a push to market rents!

Currently, the property has little to no deferred maintenance and is prime for renovation and a push to market rents!