Should I buy my dad's "deadweight" property?

[Jeremy Lee]

Hi all

My dad has a 1br/1ba lower unit condo/apartment up in Alameda and is looking to sell it because:

"don't want to deal with increasing HOA Mgmt Fees, additional liability Insurance, Prop taxes NONE of which will be useful for tax deductions as ours cap at $26.5K and NO SALT.

CASH FLOW will be declining and not worth hassle.

Not really managing anything, just one more thing I don't want to deal with and adds to taxable income."

This is more a deadweight it sounds like. 

There were a couple options he presented originally:

1) Gift the property to either one of my brothers or I, or all three of us if we were to get into some sort of LLC/Business/venture. This could create complications down the road as far as splitting it up in relationship to inheritance, etc.

2) Sell the place because he's "tired" of dealing with it and park the money in their trust invested in CA Tax free funds. 

The other option of course would be for me (probably not my brothers as they wouldn't be interested) to buy the place from them on a privately backed loan from them. 

He is *not* looking for something with higher returns - he wants to reduce his taxable income, not increase it. Both he and my mom are retired and are both collecting pensions in addition to other sources of income from a couple other properties they own. This condo just seems to be not worth their time. On the other hand, they've been charging below-market rent for a long time now (also probably due to not wanting to generate so much additional taxable income).

All this said, both the options presented above would incur capital gains taxes (either on is if he gifts it) or on him (if he sells). There's no way around that unless it becomes inherited (stepped-up basis) but I don't think he or my mom want to wait that long and would rather unload it sooner than later. Given the options stated, what do you guys think would be the best route to take? Especially if I've been considering getting into REI? Or is it just not a good idea given high housing costs in that area, etc?

BTW: he bought the place for $25k roughly and it would probably sell for $500k at least...