recapture expenses from sales proceeds before 1031 exchange

[Randall D Cheney]

We're going to sell some building lots that we have divided off of our farm, and do a 1031 exchange with the proceeds. We'd like to pull at least some of the development expenses out of the sales money before we reinvest, but have been told by our title company that that's not possible. Are there any 1031 loopholes that would allow us to do that? We know that we have to spend equal to or greater than the sales price in the new investment, and that the proceeds of multiple lots can be combined to make one purchase. We also know that the sale of each lot can be used for a separate, individual 1031 purchase. Would it be possible to 1031 the proceeds of all lots but one, and keep the proceeds of the last lot to help cover the development expenses, and then to avoid capital gains taxes on the money from the last lot, deduct all or some of the development costs from it? Any other ideas on how to cover our expenses and avoid taxes? We thought of paying cash for a property in the exchange and then doing a cash-out refi on the property to pay the development expenses, but we'd have to pay closing costs and interest etc. We could do that, but maybe there's a better way or a 1031 loophole that we don't know about. Thank you for your ideas!!