Using proceeds on sale of rental property to pay off another rental property

[Beth_D1]

We would like to sell one of our rental properties (it was a primary residence, but we have not occupied it for 2 of the last 5 years).  Can we use the proceeds of this sale to pay off a HELOC that we took out on our primary residence to purchase another rental property and avoid capital gains tax?

[tagteam]

No, unfortunately it does not work that way. 

The only way to avoid (actually defer) tax on capital gains and, most likely, recapture would be to do a 1031 exchange.