@desanto05 if dad puts say $1 million into new property from the 1031 exchange and you put in $500,000 you would have a partnership. dad would get 2/3s of income and deductions and you would get 1/3 + probably the interest from the home financing. if your suggesting that he gift you his interest there's a big tax problem for dad.
Don't Fall Into This Trap
Many people will fall into the trap of thinking that as soon as their 1031 exchange is complete, they can do whatever they want with the new property, including gifting it. However, this is not the case, because you still have to prove the proper intent of investment or business usage with your new property before doing anything else with it, or else you risk ending up in hot water with the IRS.
If you gift the property immediately after the exchange, it will be clear to the IRS that you actually did not have proper intent to use the property for investment or business. Your main desire at the time of the exchange must be to use your like-kind replacement property only for business or investment. If the IRS was to determine this then the benefits of the 1031 would be denied to your father with a bill for taxes, penalties and interest. If you eventually want to gift your property after properly using it for several years, it’s best to consult with your accountant and tax advisor to determine if you are allowed to do so.
Even with gifting the depreciation he took doesn't go away. that transfers to the donee.
Perhaps we misunderstand your intent. it is not at all clear what you want to do and what you are trying to accomplish.
