" Will I be able to gain anything from taxes on the $178k buyout amount?"
No. Not directly.
"The property was purchased in 2015 for $567,500."
So your half of the cost basis is half that amount, or $283,750
"I am paying the joint owner $178k for their share of the property."
So add that to the $283,750 and your new cost basis on the property is $461,750.
" My new mortgage will be $730k."
So hows that? Where does the extra $268,250 come from on the mortgage? What did you leave out and not mention in your post?
Additionally, I assume this is a 2-unit where "at least" one of the partners lived in one unit as their primary residence before the sale, and that did not change after the sale. So how did this get reported for tax reporting requirements? On SCH E of a 1065 Partnership Return? Or by each partner individually on SCH E as a part of each partner's personal 1040 tax return? This matters since as the sole owner you will now be reporting it on SCH E as a part of your personal 1040 tax return. You have to take into account your half of the depreciation that you can not recapture at this time, since *you* did not sell *your* half of this. Transferring the *CORRECT* amount of depreciation is doable. But if you don't know what you're doing and screw it up, the IRS auditors will have an absolute field day with you.
