I am assuming you refinanced only for the outstanding balance on the loan, and did not take any cash out. If you did take a cash out, that changes things significantly.
Overall, I would highly suggest you seek professional help for this tax year with this, and if you are not married to the new additional owner and filing a joint tax return with them, you two form a partnership. That way, everything concerning the rental gets reported on a 1065 partnership return. The partnership issues each owner a K-1 which will be required by each owner to report their share of everything on their personal 1040 tax return. Otherwise, if you want to do it the more complicated way, keep reading. I do not suggest the below, especially if your state also taxes personal income. But it's an option.
Convert the property and all it's assets to personal use with a conversion date of one day before you closed on the new loan.
After the conversion, work through each individual asset one at a time again and do not change anything. You need to write down the total of all prior year's depreciation already taken, and add it to the current year (2020) depreciation taken up to the date of conversion. This will give you the total depreciation taken on that asset.
Now subtract the total depreciation taken on the asset, from the original cost basis of that asset. That is your "new" cost basis now.
Enter the property as a completely new asset using the new, lower cost basis with an in service date of the day after you converted it to personal use. (This would be the closing date on the new loan.) For you as a 50% owner your cost basis would be half of the adjusted cost basis you obtained by subtracting the depreciation already taken on the property, from the original cost basis.
Take note that you do not and can not split the depreciation between you and the new additional owner. That's because *YOU* and you alone took all that depreciation. Therefore you, and you alone will subtract "all" (100%) depreciation that *you* took, from your 50% of the cost basis.
Depreciation will start over for you from year one with .with 2020 being the first of 27.5 years.
The new additional owner will enter it on their tax return using 50% of the original cost basis, but the new additional owner will *not* reduce that since the new owner did not have any ownership in the property prior to the new loan, and therefore has no prior depreciation to report or claim.
Overall, I do not believe the TurboTax program is capable of mathematically handling this correctly at all.
