However with the California Claw-Back provision, should you have owned a property in California and1031 exchanged the property to an out of state one, then later decide to cash out and sell the out of state property, you would not only be subject to the taxes of the state where decide to sell the property, but also to California state taxes due to this clause.Furthermore, California has passed Assembly Bill 92 (around 2013-2014) which essentially allows California the ability to track subsequent sales of properties once they are exchanged out of California.

But if there's little to no growth, then you don't have to worry about the taxes on the subsequent sale.Going to your question about how to structure this kind of JV, it's hard to summarize my thoughts here.

The potential for increased accessibility, convenience, and desirability that comes with future development can make these areas more attractive to homebuyers and investors, leading to a surge in demand and subsequently, a rise in property values.

However, if the home sells for much less than assessed value good luck getting it lowered.In fact we had one triple in assessed value due to the higher sale price & subsequent 'permit' identified rehab. 

(If you were really forgiving it, then you’d just tell them not to pay that month, and not raise the rent each/every subsequent month until it was paid back.)Just a thought to help avoid confusion among your tenants. 

Paying more likely means that a subsequent buyer would have to bring more than $10K additional to the closing. 

@Ashwin M.Assuming it’s a living trustWith our home it was acquired and mortgage in our name and subsequently we transferred it to the trustWe let the lender know this was our intention and title company and neither had an issue with it as long as deed holders were the trustees of the trustHope that helpsNote not legal advice just sharing our story

Also, since the tax benefits carry over, it offers investors passive losses they can use against qualified passive income in subsequent years. 

Having helped several clients obtain oceanview properties in the past several years that have subsequently become highly successful AirBnB's, I recently assisted a client with my first oceanfront property sale, that has rapidly become a popular BnB option and the question arose, just how many oceanfront STR's are there?

This tax boost is only one-time, and it somewhat increases your taxes in subsequent years, and it is reversed if you sell the property.