So unless the loan is interest only, there will be tax on the amount of gain realized.Also, depreciation recapture cannot be deferred at all unless the deal is done through a qualified intermediary.

Locate a 1031 intermediary in your area and sit down with them and have a general conversation.   

(I think most are good but there are some issues - for example, the private lender definition IMO shouldn't specify lending to LLCs only)https://nplaonline.com/wp-content/uploads/2023/06/NPLA-Priva...Sample (full link above)BrokerAn intermediary who connects borrowerswith lenders, helping to facilitate loantransactions and negotiate terms.Correspondent LenderA financial institution that originates andfunds loans on behalf of a larger lender,such as a bank or mortgage company, withthe larger lender purchasing the loansshortly after closing.Direct or Retail LenderA lender that originates and funds loansdirectly to the borrower rather than workingthrough intermediaries such as brokers orother financial institutions.Private LenderAn individual, group, or company thatprovides 1-4 family and/or small balancemultifamily/commercial property loans forreal estate transactions.

Better to get it straight from their training than from an intermediary that might get things twisted.

Having gone through a 1031 recently I highly recommend the guy who posted above me @Dave Foster as your qualified intermediary.

So now, the 1031 Intermediary only needs to wire $297,000 in funds for closing.

@Michael Tempel If you purchase a vacation rental you will want to talk to your CPA and intermediary regarding any personal use. 

DO NOT touch the money it needs to be with a QUALIFIED 1031 intermediary and when you close the funds (proceeds) go directly to the 1031 from the title company or attorney closing your sale.

Don’t use intermediaries in Detroit for this.  

Should I be contacting these companies direct, or through an intermediary.