They're subject to special treatment under Sec 280A.

By and large best treatment...direct pressure, as you did. 

(e) The tenancy terminates, including the right of possession of the premises, as provided in subdivision 3.Subd. 2.Treatment of information.

Running certain types of expenses through an S Corp versus a disregarded entity doesn't change treatment or ability to deduct. 

Also have a separate entity for construction / flips as you get different tax treatment.

@Russell Brazil, I do believe the South Carolina contract is similar in that a clear CL-100 inspection is expected at closing, even if there is an HOA, but if not the buyer only has the following 3 options:Accept the Property in its present condition, Negotiate with the Seller for the payment of these repairs and treatment, or Terminate this Contract by Delivering Notice of Termination to the SellerWe have been clear that we won't be replacing the sheathing as we are not authorized to remove the siding to do so, but they haven't given notice on any of the above options. 

Now, for 1031's, whether you traded up, or down, for tax treatment, your replacement property becomes two for tax purposes.In cases where you traded up, and took on a larger mortgage, the tax treatment is easier to explain and calculate.

but I will take a guess at what your askingif the developer is going to bust this into lots and you stay in you just lost your tax advantages and will be deemed a dealer at the highest tax rates.sell now no risk.. and best tax treatment you could 1031.if its one property and your saying should I partner and they are going to build an apartment on it and we will keep it.. that's different.. but you lose control because your now going to put a massive amount of debt on it.. all though in your area not too risky given market conditions.. and really depends on your developer  known, reputable and stable ?

In these you are purchasing ownership of a company or entity that owns real estate and not the real estate itself.However there is a hierarchy of real estate ownership that complies with 1031 treatment and runs the range from active to passive.  

Whatever you decide to do, you may want to have a documented business process for accepting, reviewing and approving applications then issuing leases that you follow so that you provide the same treatment to all - Then of course you have to stick to this process.