Using a 1031 on a cash investment ?

[Matthew Paetz]

I am starting to get into some of the fine print in the 1031 exchange and I have a question.

Everything I've read regarding the qualifications of a 1031 talks about reinvesting the "profits" of the transaction. I understand this when dealing with a mortgaged property but, what if the subject property was a cash investment? Do you have to invest the total amount of the deal or just the profit to qualify?

Example: Let’s say I paid $40k cash to purchase the property then "sold" the property for $60k. In order to qualify for the 1031 would I need to put all $60k into the replacement property or just the $20k profit?