1031 Exchange when I have no proceeds at settlement due to big refi in the past

[Account Closed]

Here is my situation:

I bought an investment property and improved it.  All-in for $200k cash.  I refinanced it and have a mortgage on the property for $450k.  I'm planning on selling it now and it should sell for about $500k or less.  Assuming $50k in closing costs, I should have $0 in proceeds from sale or even bring money to the table to pay off mortgage.

Net Sales Price will be $450k ($500k less $50k closing costs)

Cost basis is $200k (assume its already adjusted for depreciation for simplicity)

Capital Gain is $250k 

Am I right to not include the refinance proceeds in the above scenario when calculating capital gains?   If so, I want to do a 1031 exchange to avoid capital gains tax.  Would that be possible?  If so, how does the refinance play into that?  Also, the fact that I won't get proceeds from settlement.  

I feel like I'm missing something here.