(This partner would receive 20%)My Investor providing the capital, however, doesn't want his name anywhere. 

Finding deals and raising capital is great but one also needs to understand the different financing options\products in the market. 

I suspect selling now would be the best choice, given the market and lack of capital gains (under threshold).Not sure how to calculate this easily – I've tried using the BP rental property calculator, but my numbers are all off since we've already lived in the house 8 years.

I am looking for additional ways to build capital within real estate for my real estate investments.

If there is barely enough capital to cover closing costs, you are one sneeze away from pneumonia (vacant month, unexpected repair, bad debt, move out, etc.).

With doing this, down the road we will need to pay a capital gain if we ever sell.

You're going to need some capital to get started.

The house looks promising from an investment perspective - or at least as promising as it can be in this seller's market where most houses sell for prices where the rent is barely large enough to cover all foreseen expenses, let alone leave you with a steady cash-flow, profit.This one looks like it will allow us to get some decent cash-flow after all expenses, fixed and anticipated (including capital expenditures, vacancy etc) are accounted for. 

How would you be paying the HELOC back right away to have access to use the capital again?

Do I have to pay capital gains on the full profit from the seller or is the portion paid back taxed as an installment sale.