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

I don't know the answers on taxes, but New Jersey is the densest state in America.

I know property managers in every state who use non-refundable application fees and it is the standard for every class of property and applicant.

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

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

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.

Get a signed bill of sale including the furniture at closing for tax depreciation.Communication is key! 

Someone can be a brilliant tax person but horrible to work with, and also vice versa. 

Maybe that is why the old owner didn't pay their taxes?

@Jaycee Greene  they require a non refundable deposit and give 48hrs to see proof of funds