If they gift it to you it's tax-free (as long as they're under the lifetime gift limit around 14 million) they may have to file a gift return though, but there won't be tax due. 

I was able to secure $27k from them and $8k from our savings and the deal went through!

This approach is cost-efficient and eliminates the complexities of dual-state filings.

They're very different thankfully so it feels like there's always at least one who's acting like a normal human being...A defeasance is something that happens on commercial properties when a securitized loan (like a CMBS [commercial mortgage-backed security] or agency loan) needs to be paid off early, either when you're refinancing or selling your property that has a loan on it.

You might also delay refinancing until the property value or rent increases, which could secure better terms or higher returns.

If you were able to increase the value of the property significantly after the rehab, then you could bring the deal to a community bank  to refinance and take the hard money lender out.You keep all the equity and don’t have to file a partnership return for your annual tax return, which can be costly.  

Even if they do pay all the taxes, they don't get to use the benefits they are paying for (medicare, social security, etc.).

With high home prices, rising mortgage rates, and intense market competition, securing a property has become increasingly difficult.A recent survey found that over 60% of real estate agents reported instances where Gen Z buyers lost out on homes due to delayed decision-making, missed appointments, or hesitation in making offers.

Quote from @Paul Zofsak: Russell, what's the advantage of filing on my insurance if the HOA is liable?  

If he doesn't move out you have to go to your county precinct office and file for eviction, at which time they will give you a court date and a constable will notify your tenant of the court date.