Would this be possible using a 1031 exchange

[Mario Alexandrou]

I have a 4xunit building in Minnesota selling for 240K, of which 106K goes to clear the bank, leaving 134K. 

Through a 1013 exchange, would it be possible to purchase a new property, for say,280K using the 134K plus 46K mortgage from the bank, of which I refinanced in 6 months and retrieve the balance of the money, leaving behind the 20% for the bank.

Would the deferred tax situation for a1013 exchange remain the same.

[Dave Foster]

@Mario Alexandrou, A cash out refinance is not a taxable event.  This is a very common strategy that works great when you want cash out but also want to defer all tax.  Complete the 1031 exchange.  Then do a cash out refinance after the 1031 is complete.  You get to defer all tax in the 1031.  But you still get cash in your pocket for other uses.  

The key is to do it after a 1031 and not immediately prior to a sale.  The IRS has a propensity to call a cash out refi before a 1031 just another way to access profit.  When done after a 1031 you 're not taking profit.  You are borrowing new money secured by equity in a property you own.  and that' works fine!