#1 thing to keep in mind is that 1031 defers taxes owed to a later period in time. You're still on the hook. You will pay a tax on all of the depreciation deductions (whether or not you even took depreciation, so take it) you took called depreciation recapture. The other tax you can work around is the capital gain exclusion if you made the home a primary residence in 2 of the last 5 years. If you make a primary residence into a rental, then you have about 3 rental years max until you no longer qualify for cap gain exclusion.