Capital gains on partial release

[Brian Bundy]

I'm new here. My wife and I own a home on 15 acres that we bought from family a little over a year ago. It's our primary residence. We have a mortgage, but significant equity. Our neighbor has approached us about buying 5 acres which will require us to do a BLA and a for the lender to sign off on the partial release. By my estimates, we should still be under 80% LTV after the sale so we're hoping the lender doesn't require us to pay down the note dollar for dollar in order to approve the sale. We'd like to hold the cash to reinvest, but if they do force a pay-down, there's always HELOC. We're also concerned about owing capital gains and curious how it would be calculated on that type of sale. Say we sell it for $1,000 (for example) would the full $1,000 count as a gain or would they look at the difference between the As-Is Appraisal and the After Appraisal and take the $100 as a percent of that to determine gains?? (I'm way out of my tax league here!)

We plan to get started with investment properties (a duplex to start), but we're hesitant to try a 1031 exchange since that seems a little risky given the tight time-lines and more importantly our complete inexperience with the process.

I've reached out to a tax accountant I've worked with before, but it's tax season and he can't get me in until after April 15th.  My neighbor is antsy to get this going.  Thoughts?