How does the tax computed in a 1031 exchange when the new property is worth no more than the equity?

Confused about the 1031 exchange in partial defer…

My case is as follows:

1. I got an investment property in Los Angeles, USA which I plan to sell for 850K.

2. I got that property 15 yrs ago for 300K. Clearly, there is 550K capital gain here.

3. But I have only 400K equity here as there is 450K loan left on the property,

From the picture above, unless I do a 1031 exchange, a huge portion of the equity ( almost %50! ) is going to be handed to Uncle Sam — which I do not want to.

THEREFORE I PLAN TO DO 1031 EXCHANGE. HOWEVER, THIS TIME, I DO NOT WANT ANY LOANS ANYMORE.

SO I WANT TO BUY THE REPLACEMENT PROPERTY NO MORE THAN 400K ( which is the cash-equity I will get from the proceeds of the sale of the original property )

Here is the confusing parts…

Will I be taxed at all?
or will I be taxed over 450K gain ( which is the difference between the property being sold ( 850K ) and the property being bought in the exchange ( which is 400K )?

I read that if the total value of the new property being bought is less than the original property’s sale price, then the home-owner must be taxed over the difference? But I also read that the homeowner should only be taxed over if he receives cash thru the exchange ( in my case ), I fully invest all the cash ( 400K equity ) in the new property.

I’m completely confused here.