Cash out refinances after a 1031 exchange are not a taxable event.

@Kyle Carter, The strategy you're looking at would be what is called a "consolidation exchange". followed by a conversion to your primary residence. 

That is subjective though - I just advise my exchange clients to understand that number and understand their exposure.

Let's wrap up our QI selection series with the human element - because relationships and reputation can make or break your exchange!

The exchange must also be for like kind and quality.

Do a 1031 exchange and buy two replacement properties - one for $250K cash and one for $250K using the remaining $50K of proceeds as your down payment.Once this is done your 1031 is complete. 

Actually, it is possible do structure a 1031 Exchange on the sale of one or more relinquished properties and then using the proceeds through the 1031 Exchange to construct improvements on real property you already own.

@Eric Helena, There is no statutory prohibition against purchasing from a related party to complete a 1031 exchange. 

So if you do an exchange you are saving $100k in taxes today.

Most standard MLS contracts now include a box check for 1031 exchanges.