But it works, simplified, like if you owed $500 to CA but paid state XX $300, then you only have to pay CA the $200 difference.CA may not be able to get blood from a turnip, but they will suck that turnip dry before they let it go.Likewise if you, say, play professional sports for a team in state XX, live in state XX, make $20,000,000 a year, play 1 out of 20 games in CA, they want that 1/20th of that two million taxed in CA...but they will give a credit for the taxes you paid in state XX according to the interstate agreement. 

Am I thinking about that correctly and the examples are not including interest to simplify the example?

P.S. yes you are right I have excluded lots of additional costs to simplify the question.

And the borrower will be paying mortgage on the $154K loan going forward for 30 years.The numbers may be simplified here but hopefully this helps you understand how it flows using some values.

Simplify your life, hustle to make extra money, eat beans and rice, etc.

Data simplified is a reflection of human behavior and the external factors that are influencing it.

I have a follow up question as I have 3 young children of my own and I am always looking ahead... would it not be possible for the parents (investors) to just simply do the 1031 on their own to simplify taxes. 

And I have a mortgage for around 160k (little over 20% equity) Could someone please simplify the processes the easiest way possible.

@James Liess I'm not too familiar with NJ but I do run a Property Management Company called Simplified Management out of the Greater Boston MA.

If you were looking at a 20-unit commercial property you might look at a much more extensive round of documents, but for a 1-4 unit you're still in the residential world and the open market tends to simplify the sale process for 1-4 units.