Refinance to LLC - is it considered a sale?

[Handie Kunen]

We are rehabbing a property and will refinance afterwards to complete the BRRRR. The property is currently owned in my husband's and my personal name. We identified a local bank which is willing to refinance it into our LLC's name. The banker told us thought that this would be considered a sale, not refinance. Therefore, there may be consequences such as transfer tax etc. However, my additional concern is whether this would mean there is capital gain tax as well. I am willing to pay transfer tax and purchase title insurance. However, if there is also capital gain tax, what's the strategy to avoid paying / deferring it? 1031 exchange? FYI, the property is in Allentown, Pennsylvania.