How to take advantage of 1031 for unfinished basement?

[Udit S.]

My father recently sold an investment rental and is looking to reinvest the money under 1031. It happens to be that my wife and I recently bought a single family house (primary residence) in California with a ~1,000 sqft unfinished basement. The property is zoned for mixed use (i.e. converting the basement to make the property a duplex or creating an ADU are both eligible under zoning guidelines). My father and I are wondering the most effective way to transfer or sell the unfinished basement to him, so he can reinvest his capital to finish the basement and rent the property. Any ideas or suggestions on how to best take advantage of 1031 in this case?