1031 rules and taxes

[Ryan Yu]

I have a question regarding 1031 property exchange. If I sell a single family house for $1 million which has a mortgage of $100k, can I do the following: I buy a single family house property using 1031 exchange for $1 million and get a mortgage of $700k . So from the sale of the relinquished property I have let's say a total of $850k after paying the mortgage and broker commissions etc. Then I buy a 1031 replacement property for $1 million but get a mortgage of $700k. So of the $850k I have from selling the house I use $300k of it and the $700k mortgage loan toward the purchase of the $1 million house. Now I have $550k cash left over to either buy another properrty or invest it another way. Do I then need to pay capital gains tax on the $550k amount or not? Thanks in advance.