Agreed - plus two additional thoughts:1) I always recommend having your CPA also review the drafted operating agreement for the tax issues. 

Syndications are great for truly passive income, offering tax benefits and diversification, but require high minimum investments and long-term commitments.

Sell, get the tax savings while you can.

Remember you are exempt from excise franchise tax if you file an exempt form.This post does not create a CPA-Client relationship.

@Bradley Buxton makes a very good point to make sure to do your due diligence as you won't be an owner occupant like your in-laws.Last bit of advice: Because this is a friendly deal, you want to take your time to make sure you structure it in a way that maximizes tax and cashflow benefits for both parties. 

NJ has the highest taxes per capita in the country so high taxes are expected especially in Northern NJ.

The fact that you have a TAX-FREE income is crazy good.  

On your tax return you would report the proceeds, subtract costs and proceeds paid to seller, then the remaining profit would be your flat fee.

After depreciation you probably got that return almost 100% tax free.

Can you either rent out your current property if there’s been little/no appreciation, or sell it tax free?