It is my understanding that the new owner will have the house at the cost basis of my purchase price, for calculating capital gains taxes or depreciation.For gift tax purposes for you - FMV.For capital gain tax purposes for the recipient - your original basis/purchase price 

As far as your primary residence, if you have lived in it 2 out of the last 5 years, you should not have to pay taxes on capital gains (difference between what you paid for it & what you sold it for) up to $250,000 if you file your taxes as an individual and $500,000 if you file jointly with a spouse.Just a disclaimer, I am not a tax professional.

Some items might hold more weight than others, but you guys should sort through that together.You also might just do the partnership deal by deal - sometimes jumping into a partnership before you have officially worked together is NOT the best idea...

Is it better to sell, pay off mortgage and capital gains and take the cash to invest in another property or is it better to refi/ETO and take the cash to invest in another property?

Additionally, your brother would inherit your cost basis in the property, which could result in significant capital gains tax if he sells the property later.

The opportunity cost of losing potential market gains in your retirement fund should also be considered.

Just trying to gain a sense of hot or cold. 

Your sibling can use a 1031 exchange to defer capital gains taxes on the sale of the rental properties by reinvesting the proceeds into like-kind investment properties.

My name is William Taylor, I am extremely excited to be a Pro Member in the BiggerPockets community and ready to gain immense knowledge from all of the contributors.

The client will be solely responsible for capital gains taxes, including depreciation recapture, regardless of the agreement to share proceeds.