Does mortgage balance on original property matter for taxes?

[Andrew Nechayev]

Hello,

I was wondering if using part of proceeds from sale of original property to payoff mortgage on that property can be accounted for on form 8824?

Say you sell investment property A for 100,000 and you have 20,000 mortgage balance. You're buying investment property B for 300,000 and will take 180,000 mortgage on it. You're using qualified intermediary. You have total of 10,000 of exchange expenses, for simplicity let's say they are all associated with selling property A [commissions, fees].

QI gets $100,000 - $20,000 - $10,000 = $70,000 that he will transfer as part of funds needed to purchase property B, and you add remaining $50,000 as down payment + take $180K mortgage for the rest.

So while doing taxes form 8824 seems to have no place for paying off mortgage balance for property A. You can account for "existing mortgage/liability assumed by the other party", but I don't think that's the same as accounting for paying off mortgage balance [and thus reducing funds available for purchasing replacement property]. Is this how it works, or am I missing something obvious? TurboTax has Worksheet for the form, and it has "cash given" number that is FMV of property B minus FMV of property A more or less, but the actual cash available to put towards Property B in this case is less than FMV of property A due to needing to payoff mortgage first.

Any insights are much appreciated!

 Andrew