Conversion of Sale of Rental Property Capital Gains to Primary Residence Mortgage Exemption or Deferal

[inquisitax]

Is there a code that allows for the conversion of the sale of rental property capital gains income to primary residence mortgage as an exemption?   Or if not exemption a deferal much like a 1031 like-kind conversion?

[Bsch4477]

No. To qualify for a 1031 exchange, the new property must be "like-kind" to the original property, meaning it must be held for investment or productive use in a trade or business

[tagteam]

I concur with @Bsch4477, but am confused as to what happened in this situation.

It reads like a rental property was sold and then those gains were somehow used to payoff a mortgage on a primary residence (e.g., "mortgage exemption")?

Regardless, as mentioned, it is too late for deferral after the sale of the rental property and receipt of the proceeds by the owner thereof.

[inquisitax]

No sale was made yet

[tagteam]

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@inquisitax wrote:

No sale was made yet

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Good because you can't do what you proposed in your original post and defer gain.