I own 2 properties outright, A and B. Both A and B are multi family apartment buildings.

The properties are worth around 1.5-2m.

I wish to keep A but sell B; preferably in a tax-deferred manner.

A is in an area that has been rezoned and I wish to tear down and rebuild the property as the current building is old and I can get more than 4x the square footage because of the new zoning changes.

Is it possible to sell B and use all of the proceeds to fund the development of A in a tax-deferred manner?

Nope. You must Buy a replacement property.

@Larry H. , strangely enough there was a day when a critter called a leasehold exchange would have done just that.  Just like a reverse exchange but instead of the QI purchasing the new property and holding it until your construction was complete we lease your property from you on a 30 + year lease and improve the property and 1031 by purchasing the leasehold from us.

There was a private letter ruling that indicated this was ok a few years ago but recently some new clarifications seem to put it in jeopardy.  Most QIs don’t know of it. Even fewer will do one. But if you’ve got 40 or 50 grand and a strong legal team just in case it might be done.

Might be better to refi B or sell without the 1031 and use the proceeds after tax to improve A.