Can I get a loan prior to selling property to avoid taxes?

[Jeff Helm]

I'm negotiating a land contract for a 10 unit apartment building. The seller is concerned about taxes so we may structure multiple balloon payments over a 5 year period. However, if he went an obtained a commercial loan on the property, which he owns free and clear, would he reduce his tax liability when he sells, or in this case gets the full balloon payoff? Keep in mind he's aware of 1031, but has no plans on investing further, he's getting out of the game. Appreciate your help. Jeff