so apparently you own 100% and will be selling a fraction to a family member, Turbotax can't easily handle a fractional sale of a property. you would need to manually split the property into 2 parts the fraction you are selling and the fraction you are keeping. you would need to enter original costs and the depreciation taken on the fraction you are selling. you will be subject to section 1250 recapture up to the amount of the gain on the fraction you are selling. only the gain in excess of the 1250 recapture would be capital gain. (in your example 10K of 1250 gain - tax rate up to 25% - $74K of capital gain - tax rate depends on your total tax situation - some ould be 0%. to complicate matters you may now be required to file an annual partnership return with the family member and of course the need to incur costs to add the family member to the title.
A joint undertaking merely to share expenses isn't a partnership. Mere co-ownership of property that is maintained and leased or rented isn't a partnership. However, if the co-owners provide services to the tenants, a partnership exists.
