Please, hie yourself to a tax pro.
If the intent is to settle your debt then the transaction boils down to a sale of the property for the "more than 200k" and a gift of some amount like ($382K - "more than 200k"). I have no idea why you think this is a good maneuver. Seems like you're leaving something like ($382K - "more than 200k") on the table as a gift, and maybe that fits into your grand plan somehow, but an online discussion the the TTAX just doesn't lend itself to much nuance or a comprehensive discussion of all the details.
