So generally, if your business is buying the property you won't have to worry about a gift tax as far as my knowledge.

Build generational wealth and pay as little tax as possible.

If it is in the City of Tampa and not in the County you might Short Term Rental it to increase the Cash Flow and pay the Hotel Tax. As

OPTION 1 - PAY ALL THE TAX NOW:- "paying the tax" as income would be about $450,000 combined to CA / FED (leaving $550k free/clear from that gain)- Done.

You'll need this only for a go/no go decision on your 1031.The requirements to defer all tax (a complete exchange) are that you purchase at least as much as your net sale and you use all of the net proceeds to do that.In a partial exchange you are either purchasing less than your net sale or you are taking some cash out of the proceeds. 

At the same time need some advice on how to manage tax as don't want to pay double taxation.

I'm not sure if tax deductions only apply to Federal/State income tax or if they are applied to FICA tax as well.  

the reason why they want to gift it instead of selling it to me is to avoid capital gains tax.  As

Lived in the house more than 2 years so I don’t have capital gains tax (as my Agent says).

Sell in 5 years and no capital gains tax as far as I can tell from my research to far.