1031 Exchange Question

[Kirsten Braddock]

When using a 1031 Exchange, do you have to replace the actual amount of real estate value into another property or is it just the gain that you need to transfer to the new property?

Example: I bought a $200k SFH as a primary residence. After 6 months I used a HELOC to leverage the property to buy another rental property. After 1 year the home was turned into a rental property. The home was bought using a standard 30 year mortgage.

Home value: $300k

Mortgage balance at sale $120k. 

HELOC balance is $20k

Realtor Fee: $19,500

I walk away with $140,500. 

So do I need to roll the $140,500 into another SFH rental or do I need to roll the value of the original property $300k?

Thank you!