Can you 1031 with an owner Carryback 2nd Mortgage

[Eric Fegan]

Does anyone know if you can complete a 1031 exchange if you sell a property but carry back a small second mortgage? For example, if you sell a property for $1mm and receive $900k in cash and carry a second mortgage for the final $100k how does this affect the 1031 and tax consequences? For purposes of the example, assume a 600k adjusted cost basis. Would you exchange out of the $900k portion but pay tax on the final similar to an installment sale.