If they gift the property to you, then your cost basis is whatever they paid for the property plus improvements. If they sell it to you, then your cost basis is what you paid them for the property.
If they sell you the property, they may have to pay capital gains tax. If they gift you the property, technically they would be liable for gift tax for the value of the property less the $14,000 annual exclusion. In practice, since the gift can go against their lifetime gift/estate exclusion, which is now over $5 million, they wouldn't have to pay.
There are Medicaid considerations as well, whether they are currently on Medicaid or you expect them to in the future. This whole area is very messy. It is best you retain a lawyer who specializes in "elder law".
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Today's Featured Article - 12-Volt Conversions for 4-Cylinder Ford 2000 & 4000 Tractors - by Tommy Duvall. After two summers of having to park my old 1964 model 4000 gas 4 cyl. on a hill just in case the 6 volt system, for whatever reason, would not crank her, I decided to try the 12 volt conversion. After some research of convert or not, I decided to go ahead, the main reason being that this tractor was a working tractor, not a show tractor (yet). I did keep everything I replaced for the day I do want to restore her to showroom condition.
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