I’m in the 33% tax bracket through my real job and this could be a big difference in taxes owed if we sold the property?

This is a screenshot from a private Facebook group for tax professionals.

Home went to tax sale county kept excess proceeds.

Your requirements to defer all tax are to purchase at least as much as your net sale. 

Also, these people have been collecting unemployment with the additional $600 a week federal money for 4 months and never bothered to pay any amount towards rental payment (money which we pay for in tax) and they get for free.

This isn’t/wasn’t a loophole - just tax policy. 

You will want to fully understand the tax reporting burden you will face. 

It is tax free in the sense that you will not owe taxes today on the cash-out.

And you now have to file three tax returns:- partnership tax return- your individual tax return reporting 1/2 of the partnership losses- your partner's individual tax return reporting their 1/2 of the partnership lossesAnd while partnership return can be DIY-ed, it probably should not be.

(As AZ and your current state will fight over who gets to tax your gains with the federal government.)I have to throw most of the shade on your horrible tax guy/cpa who didn’t tell you renting it out was a $50-$100k mistake.