If it's self-employment income, the net income on your tax returns from 2022 and 2023 will be averaged.

Assuming a 30% tax on the gain, I am ballparking that benefit to be a $480k tax shield for the children.However, the owners would prefer to sell now.  

I am curious if the fees I am being presented are in line with market norms:lender app fee: $10,000Origination fee 1% ($20,000)Lender costs: shows a fixed amount at $10,000processing fee $895registration fee $10,000Title and escrow fees: $4,000 est.6.5% rate fixed at 10 yearsPrepayment Penalty: Yield Maintenance months 1-114 (1% minimum)Third Party ReportsApppraisal Required Engineering Required Environmental N/A Seismic Report N/A Market Study N/A Funded EscrowsReal Estate Taxes Required Prop/Liability Insurance Required Special Assessments N/A Ground Lease N/A Replacement Reserves N/A Required Repairs TBD Debt Service Reserve N/AWould love to hear your thoughts on this as well as what you think is appropriate fees for the freddie mac sbl program. 

So you’re going to have utilities, a year’s insurance, taxes, mortgage payments and then the rehab cost.

Here is my expected cost:Land: $475kAcquisition Costs (Environmental, Survey, Geotech, Traffic Study): $25kSoft Costs (Engineering, architect, impact fees, permit, legal, closing costs, taxes, interim interest): $300kSite Development Costs: (Earthwork, underground utilities, curb cuts, fencing, stormwater, paving, landscaping): $800k ($400k/acre)Subtotal before vertical costs: $1,600,000 ($80/SF). 

As for NYC rental properties and putting your one rental property into a Trust, consult professional journals for this.  

Then get hit with the capital gains tax, but then when you buy second property and live in there 2 years and sell, do you get to transfer over the 2 years no tax benefit since you did not use it on the first property?

Ensure you fully understand the tax consequences between LTR, STR, and flipping properties. 

They get taxed in the year they receive their money.  

I would recommend consulting a real estate attorney before you start whipping up leases that have terms like that.