But, now that taxes have come around, because the 1031 was never put in her name, she is getting taxed for the capital gains on her portion, which defeats the whole purpose of the 1031.

We would get back a portion of VA entitlement to then be able to use on our next primary residence purchase. (2020 Loan limits are supposed to go away for VA loans)My hesitations are the following- Seeing that residence is no longer a primary residence the Refi would not be able to be a VA loan (to my knowledge) so we will need to pay closing costs a down payment +PMI monthly on a home we already own. 

Where I am struggling is when you take into consideration the tax due because the CRA taxes you on taxable income (where the big difference being that you can only deduct the interest portion of the mortgage payment so even if you cashflow positive, you have negative earnings after taxes), I find it very difficult to make the math work unless you put high % down payment.When you invest in Canada, do you only look at cash-on-cash return or because of the tax treatment in Canada, do you look at the taxable income as well?

The larger portion is rented out for $950 monthly on a freshly signed 18month lease.

If its 320 acres of farmland, the house is only a small portion of the property value.

This eats a significant portion of my cash flow and makes it impossible to eventually hire a property management firm once I do acquire more properties. 

You would need to rent your fathers portion and actually have a lease and pay rent if you want to be safe. 

The short of it is, there is a rebate of the provincial portion of the property tax to owner occupants (they have to apply for it to get it).

So I will have 30+ in offer and seems like it will have to sit for awhile.Thoughts on leaving large portion in offer upfront?

Now, i will bet $2 more dollars that Harris bank covered their but with the surplus by filing a special consideration in receiving a portion of any proceedings from a foreclosure auction by the second.Now, there are some states where if the second mortgage forecloses the first will still be able to collect surplus depending on the time the lis pend was filed Funny gray area i my self have used to claim surplus (and got it) , the second foreclosed, before my first , which put my mortgage in a bad position BUT I COLLECTED THROUGH THE JUDGMENT which came next in line!