When do you pay the taxes if you 1031 and end up paying off the mortgage?

[Ramiro Rodriguez]

I am considering a 1031 Exchange when we decide to "move up" in home in the future. If we 1031 Exchange and end up staying in the home a paying off the mortgage are the deferred taxes due the day you pay off the property or is there a window of time in which they will be have to paid? How does that work? 

[Dave Foster]

@Ramiro Rodriguez, a 1031 exchange is only for the sale and purchase of investment property as @Basit Siddiqi said.  If you're selling your primary residence then you must have lived in the property for 2 out of the previous 5 years.  And you can sell and get the first $250K of gain ($500K if married) tax free.  The mortgage doesn't determine your gain like @Andrew Syrios said.  But no opportunity for a 1031 exchange.

If you're selling an investment property you can indeed 1031 exchange into another investment property.  And as long as you own that property you'll never pay the tax.  And while you cannot 1031 into your next primary residence immediately, there are provisions in the tax code to later convert a 1031 investment property into your new primary residence.  It just takes a little bit of runway.  But again, as long as you own that property (whether you convert it or not) you'll not pay taxes.