@mfarraj94 wrote:
Thank you very much for your reply, I have not done this yet but looking to hear some general advice before taking any action.
As you alluded to, I will go ahead and speak with a CPA on this, thank you for all of the information provided.
Looking at this further, I think what you want is for your partner to buy you out of the partnership,, and the price you have agreed on is the profit from property 1, plus some additional money the partner will obtain on their own (from sale of another property, but since that's outside the partnership, it doesn't really matter where the other partner gets the funds.)
The simplest default method will be for the partnership to sell property 1, report the capital gains as partnership income, and both partners pay half the capital gains tax. Then, the other partner buys you out. If the plan is that the other partner won't pay income tax on the property, you would simply make an adjustment in the sales price to offset the taxes that the partner does pay.
I would imagine that you could structure the sale and buyout in a different way where you would pay all the taxes directly, instead of indirectly, but that's where you really want professional help.
