I disagree with the others. As you pointed out, mere co-ownership of a rental property (that does not rise to the level of a "trade or business"), is not a Partnership. I suppose maybe it can be, but does not need to be. To me, filing as a Partnership adds unnecessary complication. However, I do recommend getting EVERYTHING in writing, to protect you both. Going to a business attorney may be helpful with that. It needs to be detailed, including what is to happen if one of you want out, if one of you dies, if one of you want to sell only their share to a third party, etc.
In answer to your question, you divide everything in relation to your "asset" in half.
Create a new "asset" for depreciation. Enter HALF of everything; the Basis, the land, the prior depreciation. Use the original "placed in service" date.
Do it again. You now have two new "half" asset. Then go through one of them and say it was sold.
Delete the original 'full' asset.
