Bill is correct the exchange of a rental property to pay off debts does not qualify for a 1031 exchange.
Further you need to look at the tax consequences of the sale. The gain on the sale goes back to the original purchase price, plus improvements, less depreciation - so it may be that you will have a sale where the taxes paid use up all or nearly all of the net proceeds on the sale. The HELOC does not increase the cost basis of the property unless you used it for improvements on the Norfolk property.
Have your CPA calculate the taxable gain before you sell.
You could do a 1031 exchange from the Norfolk property into another rental in the Memphis area to make managment easier.
Good luck,
Timothy J Folkers, CPA
Principal
Folkers, Choi & Associates
An Accountancy Corporation
18818 Teller Ave., Suite 109
Irvine, CA 92612
(949) 399-1040 ext 126 -Direct
(949) 399-1041 fax
Tim@FCA-CPA.com
www.FCA-CPA.com
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