There are other calculations that you have to factor in to get to your adjusted cost basis such as recapture of depreciation and adding capital improvements to the basis.- Can I use the closing cost amount of the old and new home as part of the tax free money I can spend from the 1031 exchange or these closing cost are purely out of pocket amounts?

It's a beautiful thing.

I am very blessed to be married to my beautiful bride and we have 3 amazing little boys, ages: 1, 3 and 4, who keep us very busy.My previous profession was as a golf course architect with Kyle Phillips Golf Course Design, which I still consult with from time to time.  

Second, there are a number of factors that distinguish an independent contractor from an employee and paying for someones insurance would definitely not help your argument that they are an independent contractor. 

With this being our primary residence and with all the other factors mentioned above, would you say it is ok to pay the extra $10,000 and not complete all of the finishes we would like to put in the home since some of them would only be cosmetic.

It was properly permitted and looked beautiful when he was done

Three kids, a super beautiful wife, two rentals, and a beautiful home in Carlsbad.  

I would definitely factor in the other expenses.

On the sale side, title, escrow, and most closing costs are paid from proceeds of escrow so they do not come out of your pocket and thus, do not factor into your ROI equation.

Specifically,"FinCEN intends the proposed regulations to reflect the distinction between a seller-financed transaction (which typically involves family members or friends in a one-time transaction) and a person that is primarily engaged in the mortgage finance business but for business reasons or changes in markets, competition or other factors, conducts relatively few transactions within a given period."