A knowledgeable attorney can advise here.Create a solid operating agreement: Since you own the condo with a friend, a clear operating agreement is essential to outline responsibilities, decision-making, and profit-sharing for the LLC.To save on costs:Look for real estate attorneys who specialize in investment properties and might offer package deals for the retitling, operating agreement, and filing the LLC.Shop around for title companies that can handle the transfer smoothly and provide competitive rates.Research DIY options for setting up the LLC if your situation is straightforward, though I’d still recommend a lawyer for the transfer process itself.Good luck with the process!

You filed two full year tax cycles and the numbers are similar (no greater variant than 1%) they maybe yes.Generally depreciation is added back as income BUT only the 40% portion you own not all of it.

The guy has already stated that he doesn't live there so that alone proves that he knows that was never the intended use (is their a police report or statement for your file?).

As long as you're filing jointly, both meeting the 2 yr use test, and either meeting the ownership test, then the full $500k can be claimed. 

I doubt 10% of the GRM will equal enough to where an S filing status makes sense.The home office and such is nominal so that alone isn’t worth doing this.

File an eviction with the court and provide the proper notices (e.g., 10-day notice to pay or vacate for nonpayment of rent).

When you file your taxes at the end of the year the accountant is going to ask you for your receipts or what and how much you want to write off using deductions.

The 25% has to be your funds.Now, there are non conventional options that would be a bit more flexible but even most of those programs will require at least 20% down with no second mortgages filed on the property. 

Quote from @Jin Zhang: You initiate the process by filing a 3-day Notice.

This strategy allows them to eventually exclude up to 250,000 (500,000 if married filing jointly) of gain from taxes when they sell the property as a primary residence.Hope this helps!