Question On 1031 Exchanges

[Jim Cummings]

A Question On 1031 Exchanges for the 1031 Experts on the Forum.

BACKGROUND:

Sold Investment property in 2016 netting around $225,000. Money deposited with 1031 Exchanger. Bought 2 properties with 1031 proceeds. Paid minimum DP 25% plus Closing Costs (approximately $65,000) for property 1., and used the balance (approximately $160,000) for property 2.  

CURRENT SITUATION:

Have an opportunity to sell property 1 to current tenants. Would GROSS about $90,000 from Sale. Net of about $25,000 over and above the $65,000 of 1031 Money invested.

Intentions are to roll the money over into another 1031 Investment. However, in today's superheated market don't want to HAVE to buy something that doesn't work very well just to avoid taxes. 

QUESTIONS: 

What are the ramifications if I don't reinvest the proceeds into another 1031 Investment?

1. Am I subject to Capital Gains Taxes on the approximately $90,000 of gross profit from the sale of property 1?

OR 

2. Am I subject to paying Capital gains Taxes on all the proceeds from the original 1031 (approx $225,000) PLUS the additional $25,000 gain on property 1, for a total of about $250,000?

3. Any other insights / action I should take in lieu of the above?

Appreciate your insight.