There is no "best way" to dump someone or break someone's heart.
There is only (your) way. There is nothing you can say that can make someone feel better about having their heart broken.
My standard advice is to make sure you do it a (their place) so you can exit after you have said what needs to be said. Keep it short and to the point. "I'm not happy and I feel our relationship has run it's course." Don't run down a list of their faults. This only causes them to make promises to change, defend themselves, or point out your imperfections. None of which concludes the conversation.
Do NOT offer "instant friendship" as a consolation prize! People that get dumped accept "friendship" with a hidden of agenda that they'll be able to "win" you back. The best way to become friends is after there has been a gap in time and both of you have begun dating other people.
Clearly because you know the relationship is about to end you are in a position to make sure you remove any items that belong to you from their house prior to the conversation and on the day you have the talk make sure bring any of their items with you. Let them know you will instituting a "no-contact" rule with them. Remember you are the LAST person who can help them get over YOU. Best of luck!