Hello Mike. You really should consult with a tax adviser and/or attorney specializing in taxes and estate planning. It sounds like you are trying to give your partner a property worth nearly $400,000 in exchange for taking over a $120,000 loan. I am assuming that your partner has no current interest in the property already and is not a co-borrower on the loan. While you could theoretically sell the property to your partner for $120,000 and have him get a loan for the purchase price, I believe that at least one of the tax authorities might question the transfer for an amount that is so much below the actual market value. I believe the answer to your question may also depend on what your motivation is for wanting to transfer the property to your partner. You are prudent to think about the possible consequences of the transfer prior to taking action. Good luck to you.