1031 Tax Question...

[Todd F.]

I have a rental property in escrow. I get the basics of what I need to do, I have the Exchange Company set up already with everything that they need to this point, I know I need to ID a property or properties within 45 day of closing and close on the new property/properties within 180 days. To be completely clean I need to buy at least at the price Im selling for and reinvest all of the proceeds.

Here is is my question:

If I buy spending less than what I sold for but put all of the proceeds toward the new purchases how does the taxes work?

So If I sold at $1,000,000 walked away with $500,000 but only exchange to $900k in property and reinvest the entire $500k?

or 

What if I buy at $1 million and only reinvest $400k?

Does one of these scenarios benefit me better tax wise than the other?

Thanks!