Commercial property, taxes, and estate planning

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I am looking at acquiring a commercial property (strip mall) from a family friend and trying to come up with some attractive ways to make an offer that. I have had preliminary discussions with the owner (he is 75, property is owned free and clear, has no direct heirs) but have not submitted an offer yet. He has a large estate but is currently below the estate tax limit of $11.x million. A few notes and questions...

  1. Option 1 - master lease. Pay rent, control the property, inherit it when he dies. I have discussed this general deal structure with him and he is open to it. All payments would be earned income to him, yes? The lease agreement would not reference the estate planning docs at all to avoid any reclassification as a purchase.
  2. Option 2 - purchase, he holds mortgage.
    1. Is it possible/legal to have a mortgage where 100% or nearly 100% of payments go to principal? This would make his income capital gains and depreciation recapture rather than a mix of cap gains and earned income.
    2. What are the tax implications if purchase price is, say, $500k, and at time of death principal balance is $400k and he bequeaths the property (worth $600k) to me? Can I inherit it with the remaining balance going to $0?
  3. Option 3. Purchase XX% of the property, lease AA%, inherit the AA%. Would my cost basis be XX% purchase price/AA% value when inherit or would it be the full value at time of death?

Thanks for your help!

Yeah you really just need to pay a commercial attorney for legal advise and a consult with a tax accountant. If you want a legal opinion letter from an attorney it would cost more.