Would you consider HELOC part of your capital gain?

I have a question on HELOCs. I have a HELOC on my investment home (A). I would like to buy another (B) and use the HELOC as part of my downpayment. My question is is that when I decide to buy another home (C) using Section 1031, what happens to the HELOC I used as a downpayment on home (B)? Does all of the money (including the HELOC downpayment) involved in the Section 1031 get transferred to the new investment (C) or does the HELOC downpayment come to me as cash and I do not get taxed on it since it is a cash downpayment. How does this work?

I would definitely consider HELOC. This is one i've heard good things about.

Congratulations! I bet jamesandrel waited over 3 years just for your absolute nonsense "answer." Now he can buy that second investment home because you heard good things about HELOC.