DEAR BOB: I am considering selling a rental house I own. My plan is to invest the sales proceeds into another rental house I own to improve it, also paying down the mortgage balance. Will this qualify as a tax-deferred exchange? It seems to comply with the "spirit of the law" – Doug W. DEAR DOUG: Because you already own the rental property you want to improve and pay down its mortgage balance, it cannot qualify for an Internal Revenue Code 1031 tax-deferred exchange. Forget about your "spirit of the law" silly idea. IRS revenue agents don't think like that. Purchase Bob Bruss reports online. IRC 1031 requires you to acquire a qualifying "like kind" rental or investment property of equal or greater market value without receiving any taxable "boot," such as cash or net mortgage reli...
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