As others have mentioned here, the other way to gain legal protection is a large umbrella policy.

Be aware of the 3/5 rule in terms of selling without having to pay capital gains tax. 

Can I build my case around helping her avoid capital gains tax?

Can I build my case around helping her avoid capital gains tax?

But you will have to commit time and energy to gain all the profits. 

Steady gains will win!!

With a HELOC, the stated rate is the true rate of interest you're paying, so you'll gain equity way way faster and pay off your mortgage much quicker.Best of luck, whatever you choose.

With capital gains taxes they would like to explore the option of a 1031 exchange.

If you don't have the experience, then you'll be unlikely to gain that loan.  

Payments that you make normally fall into one of 3 buckets100% of the payment can be factored in somewhere on the returnPartial payment can be factored somewhere on the return0% of the payment can be factored in somewhere on the returnHouse-hacking also has considerable tax implications in the event that you want to sell this property.You can potentially defer a portion or all of the gain on the investment property with 1031 exclusion.You can potentially exclude a portion or all of the gain on the personal residence with section 121 exclusion