@Chris Seveney Perhaps he is seeking to passively invest (no management function) in real estate in Alabama...

The main area of concern is how lines 20-26g on the 4797 don't seem to have any provision for the deferred gain that is the whole point of the exchange, so when filled out it seems to show the whole gain as taxable capital gains.  

Use more OPM to gain more CoC and ROI.Your numbers look okay, even though a few assumptions are hard to judge from our side, in terms of your DIY input and time to get it done.

then you will have the cash to complete the exchange.1031 exchanges are the tool to continue to defer the tax on your gain and to transition into passive assets until you pass the asset at death at a step up basis and the tax disappears for your heirs.Installment sales will allow you to slow down the recognition of gain but not defer indefinitely.It's difficult to mix the two but can be done with some sophisticated planning and some outside resources.

This will likely be your best source for finding a deal that make sense and gaining the knowledge and insights to be successful.In the meantime I would save your money and when you comes along you will be ready.Wish you the best of luck.

Will I be due to pay the capital gains taxes or is this considered an exchange?

I understand that argument but except capital gains which one makes more sense form a cash flow point of view ?

I guess I am trying to figure out what Net-worth gain we would get back based on the money we initially invested at the beginning.

If the lien amount is paid with no funds going to buyer would that trigger capital gains for them?

He will have strong rental cashflow and substantial equity gain from the forced appreciation as well as neighborhood growth and increased demand.