Hi @Steve ChristmasWhen I was in multi family property management as a property manager I had to audit applications after we ran the application through our screening company.The way we did applications was anyone over 18 years of age would need to complete the application.

If audited and discovered, the transactions would be deemed as arrangements and both accounts would be penalized.

While you might get away with paying capital gains, it may also increase your risk of audit, which may not be worth the trade-off.Again, I'm NOT a tax professional, so get professional verification of everything I'm saying before you listen to me

HUD loans are not cheap as there are many fees involved (replacement reserve is .6% of the total improvement costs, HUD application fee which is .3% of the loan amount, market study, phase 1, HUD inspection fee, annual audit, etc).

That means requiring audited financials.

Educating yourself and gaining knowledge and information on 2 foreclosure Defense tools: Securitization Audit and Forensic Audit.

@Ryan Melander, An audit of a 1031 if it ever happens will focus on documentation and timing of the 1031, arms lengthness of the transaction, and chain of custody of the proceeds.  

However, you'll want to have supporting documents in place to prove your intent should you get audited.  

It's always better to be safe than sorry and end up having an audit next year. 

It's important that are able to collect and organize these documents as we generally get audited each policy year prior to renewal.