Not sure if this transaction would qualify for a 1031:http://www.1031corp.com/1031-exchanges-made-easy/1031-exchange-requirement/Originally posted by above link: ...Examples of non-like-kind real property that cannot be exchanged under Section 1031 include primary residences, “flips,” stocks, bonds, notes, mortgages, cash, equipment, goodwill, inventory and interests in a partnership.Emphasis (bold) is by me.

At that point you have your tenant-buyer and a non-refundable down payment.

How about the loss incurred with a non-paying tenant?

I had a tenant recent put a money order in her mail box (the non-locking kind at the end of the driveway) to be mailed to me.... and was somehow suprised when I called asking where the rent was.

What the money will be used for - is it for consumer or non-consumer purpose?

This will only work for friends and family who trust that you aren't going to bail on them.For non friends and family investors you can go through the LLC route, although after trying this a few times, I will never do it again.The other route is to offer a private placement.

Using a trust vehicle eliminates any non assignability issues, and avoids additional costs with a double close.

As best I can tell they give grants to non profits in the form of property and cash but i'm not really clear.Anyone heard of this before?

Would be (have been) cleaner to have been splitting the payments 50/50, that way you would have each remained 50/50 partners.

Generally, all non-rental income is not subject to SE tax.If it is multi-member and no election is made it is taxed as a partnership.If it is single or multi-member and Form 2553 is filed it will be taxed as an S-corporation in which distributions may be made and not necessarily all income will be subject to SE tax.If it is single or multi-member and Form 8832 is filed it will be taxed as a C-corporation which is taxed and dividends will be taxed personally as well.