I completely agree with @Ashish Acharya's points about the cost-effectiveness of a HELOC and the potential credit implications if it’s secured by your primary residence.

Congratulations, you get to share your partners tax burden and pay the depreciation recapture at ordinary income rates. 

You can take any proceeds tax free and roll into a different investment. 

If you are setting aside funds for capex, taxes, insurance, or other expenses that don't occur monthly, transfer those funds to Savings each month and hold them there until it's time to spend them.

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

If you do place the property in her name, you've got a Gift Tax (Form 709) to complete. 

Is it tax smart? 

Utilized a low down payment loan, maxed seller credit, tax proration and closed on the 1st of the month to maximize my cash and acquire this property What was the outcome?

even if its interest only, id want to pay down principal here and there. seems like sellers would offer this interest only route so they have 0 capital gains tax, but id rather pay down a bit of principal in 7yrs. i see its not required but it should allow for principal paydown in promissary note3) any general advice to look out for on seller financing?

There are some programs through local government systems where you may be able to receive a tax abatement or grant here in Michigan in an effort to help beautify a neighborhood.