Land Contract- Cash Out REFI or 1031

[Darvin Johnson]

I currently have a home that I am selling under land contract which has about a year and a half left on the contract. Once the home is purchased I will have about $40k profit.

I know that I could use the 1031 exchange to purchase a new property and prolong the taxes. What I was wondering is if I pulled out the equity now and used that to put towards a new property would that essentially leave me at break even after the sale and allow me an avenue to even further reduce or by pass taxes completely? 

I'm aware of the possibility that something may happen and they may not be able to purchase the home but even with the addition equity taken out the rental rate still more than makes up for the price difference. 

Thanks all, looking forward to hearing your thoughts.