This will not qualify for 1031 exchange treatment. You are selling real estate and paying off a mortgage, which is not an acquisition/purchase of a real estate interest. You would have to acquire other like-kind replacement property.
William L. Exeter
President and Chief Executive Officer
EXETER 1031 Exchange Services, LLC
A Qualified Intermediary (Accommodator) for 1031 Exchanges
EXETER Fiduciary Services, LLC
A Private Professional Fiduciary Services Company
http://www.exeter1031.comhttp://www.exeterdst.com