1031 Exchange

[PayrollHRGuy]

Capital gain in it's simplest form.

Selling Price MINUS Purchase Price = Capital Gain

There are other things that can effect that. Having a loan on the property isn't one of them.

 

[LdiJ]

Ok thanks a lot for all the explanation.
One last question. What if I take some more equity loan on the property. Say in the above example I take another 40K equity loan. Would it make my capital gain zero. How long before I sell the property equity loan is considered?

No, you cannot borrow more money in order to avoid capital gains.