Paying off additional expenses after a 1031 exchange?

[Sarah Lorenz]

We are about to sell a house that is a flip/construction project--it's a total rehab and we've added a significant addition to the property, so we will have held it somewhere between 9-11 months and have not lived in the property. Initially we thought we could not use a 1031 exchange on a short-term flip, but with the extended timeline, our title company says that we can. This is our first flip in a while, so they don't think we will be considered dealers. However, we put a significant down payment on the property and have paid for holding costs and some materials out of pocket/outside of the construction loan. My understanding is that all proceeds from the sale must go into the 1031 escrow account, other than liens on the house itself, so that we cannot recoup the down payment, holding costs or pay off materials on a credit card. Are there any other ways to pay off those things? Should we ask our builder to put an additional lien on the property to cover "cost overruns" and then have them reimburse us for the materials that we paid for out-of-pocket? I'm assuming I won't be able to get a home equity loan on a construction project that is nearing completion with a one-year construction loan in place.