They did you a huge favor for no benefit, so the least you could do is avoid complicating their tax situation.    

Of course a year from now the landscape could be entirely different so it is key to keep your powder dry and options open till then.There are a couple of twists to a 1031 that may allow you to still benefit from one and yet re-position your money to your benefit as well.1. 1031 into an alternative real estate investment.  

vlad, I would think you could dissect the comps more: square footage, locations, amenities and make some adjustments to get a ball park number .they may have been all over, but may help you make the "reasonable offer" if you can study them some and maybe get what  duplexes are going for on a sq foot basis in the vicinity, a factor which may still work in your favor as you will be newer and probably better conditon with a new/newer build...

We plan on buying separately using our first time home buyers benefits as well as using FHA or FHA 203k on a value add that needs some light TLC no sink holes!

I've toured the property and found that it has benefited from his constant attention and is in above average condition (new roofs, carpet, etc). 

Enjoying the financial benefits but a design flaw I overlooked when deciding to buy is that the steps going down to the basement is shared.

@Ethan Vegas I agree, as a business man I believe in both party benefiting!.

Many of the notes I've bought have been LCs, so I view that as a benefit.

Cash incentive MIGHT help persuade him, but it would be to your benefit to just to let him know a general time frame of when you will need him next so you can have your place in line.

He just needs to know that he doesn't get to benefit financially now - his IRA benefits.