He cannot 1031 his proceeds into the new joint venture deal with you as a partner in a partnership. 

We plan to create an LLC and joint checking account.

You can then build a business or joint-venture together.Investing with partners has it's own caveats as mentioned.

However you're talking to amateur here.Nope...The exemption, $250k single/$500k joint return is Per primary residence, not lifetime.20 years or so ago, the exemption only applied if you bought another primary afterward....that no longer applies. 

I am assuming that your friend is on title as a tenant in common or joint tenant and not simply a lender on this project. 

Spouse & I will retain ownership; joint ownership with Child isn't an option.

i dnt know what exists locally but i know in various countries they call it  joint ventures when people team together to buy property  legally with a solicitor to buy or invest together one might have money but not time the other has time but no money. or i have seen in usa  coops that i dnt quite understand b ut its seems a few people can buy a place with separate units together and not quite own a certai part but be part of the coop and there are ways with some properties to sell one unit . 

Hey Justin, The tenants should be "jointly and severally liable" for the duration of the lease. 

If that's the case and you're more likely going into a joint venture agreement or partnership, you might want to check out this link for reference:https://www.biggerpockets.com/...https://www.biggerpockets.com/...Of course, as others have stated here, it's best to consult an attorney when dealing with a partnership.

Hello. I am looking for some input on a partnership deal--has anyone successfully or unsuccessfully gone this route? Looking for some advice/things to keep in mind. TIA