Simply gifting him half the property now wouldn’t immediately allow him to claim the exclusion without fulfilling this residency requirement, I don't believe.One thought would be to use a HELOC to pull just enough equity out of the current home and use it to buy a smaller home, or at least the down payment.

Same goes with Trustor or Mortgagor payments.  

However, finding properties that would cash flow with a 20-25% down payment on 400k property has been challenging.

Some companies call this a markup for managing the payment of utility bills.

Financing: I'm confident I can put $10,000 down as a down payment within the next year.

You'll likely need a higher down payment if you can find anyone willing to finance something like this as a first time investor; many require some level of rehab experience at the very least.

The total cost for this monthly for me is $1.00 fee for online payment for Sevier County, TN and the .73 cent stamp for Blount County, TN.

As far as SingleKey actually paying out on claims for tenant non-payment up to 12 months, property damages up to $10k reimbursed, covering 30 days of vacant property losses and helping out with tenant evictions up to $2k (as advertised), curious if anyone on here can attest to SingleKey actually paying out on these claims successfully.

The payments and interest are high.

@Timothy Frazier Yes, the only reason to use HML as a down payment is if the property is "mostly turnkey" AND you don't have the funds to renovate AND you have strong CMA comps from a real estate agent that supports that the fact that you are buying a property that is under valued AND your renovations would push that so that you could refinance.