1031 *plus* Section 21 $500k exemption on same property

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Hi all. We're planning on selling a home that we used to live in. We can take the Section 21 tax exemption ($500k tax-free). But we'd also like to do a 1031 exchange. Now, I've talked to three (THREE!) accountants, and every single one had a different answer. Let me give you the scenario. 

Home purchased for $660,000

Assume depreciation of $30,000

Did about $150,000 of upgrades over the years

Mortgage is about $400,000

HELOC is about $50,000

Let's say the home sells for $1.63M just to make the math easy (although it will likely sell for more).

SOOOOOO....

How much money do we have to put into the new property when we do the 1031?

(1) $1.63M minus closing costs minus $500,000 (because we can take that as cash, tax-free, and it doesn't count as boot), with a loan of at least $450,000 b/c that's how much we had outstanding on the current property

(2) Only the net (let's just say like $1M, forgetting about closing costs right now, just for math's sake), minus $500,000 (because we can take that as cash, tax-free, and it doesn't count as boot), so that's about $500k that must be rolled into the new qualified property... plus we need a loan of at least $450,000 b/c that's how much we had outstanding on the current property, so we're looking at a property of about $950k-ish

(3) A totally different amount

THANK YOU