Selling a property with a 2nd mortgage

[Christopher Todd]

As many people do in their younger years, we accumulated a fairly large amount of consumer debt; around $55,000 worth. However we began to make better financial decisions and in the process of such built a home that had a large amount of equity in it when we were finished. Trying to alleviate monthly payments we took out a second mortgage on the equity of our primary residence to cover our consumer debt. Seven years ago we moved because of work and have utilized the home as a rental ever since. We recently sold the home to our renter and did a 1031 exchange on the sale. I am wondering what my tax liability will be if any, on the money is used to pay off the second mortgage.