Possible to add co-borrower to 1031?

[David Lee]

Hi,

My parents own a rental property that is paid off and they are thinking of selling it. However, I'm not sure if 1031 is possible or better.

Option 1: they lived there as primary residence for 9 years, then rented it out for 9 years. They are thinking to move back in to get some exclusion, so 9 rental/20 total ownership years is 45% non qualifying use. Purchase price $250k, sell price $700k, depreciated $80k. So if they sold they would have a profit of $450k * 45% so $202.5k + 80k they would need to pay taxes on - so about $60k in federal and state taxes.

Option 2: 1031 the $700k, but I would need to be on the new home deed to qualify for the loan. Ultimately, within a few years, they do not wish to have their names on the new home title or loan as well. Is this a possibility to 1031 into 3 borrowers - mom, dad, son? Can I add my name into the property now, and then 1031 into a new rental property?

Any other good options other than simply selling?

Thanks much!