This model provides a lot more accountability as the interest have to be mutually aligned since that provider will be married with you through the longevity of the investment. 

The "2 of the last 5 year rule" in U.S. real estate allows homeowners to exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains from their income when selling their primary residence, provided they meet two criteria: they must have owned the home for at least two years and lived in it as their primary residence for at least two years within the five-year period ending on the sale date.

Probably a good thing for US tax payers since we are in a seller's market.

Also, why would State not accept any “contemporaneous record” maintained by the taxpayer (or taxpayer’s CPA)?

Wife and I recently married.

I would never recommend people mix finances and /or share mortgage when they are not married.

I don't think they are married, but refer to themselves as "partners", and appear to have been co-habitating prior and during grad school. 

You can sell that property as the trust and buy as yourself or as a "disregarded LLC"(an LLC that you are the only member of and that also does not file it's own tax return.In a 1031 exchange, the taxpayer for the old property must be the tax payer for the new property. 

Got to marry right. 

Taking out $500K of tax free money (sounds like Section 121 (married)) through the sale of the property is great if you're trying to scale your portfolio.