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 - It Can't Be Done! - A Tractor Story - by Neil Campbell. I'll never forget the time back when I was a boy baling hay on our Farm in Big Rapid, Michigan. The most memorable event that took place was a trip up the steepest incline on the farm pulling an old New-Idea baler with a pony-motor for power and a haywagon. I had just talked my Dad into buying an old John Deere B with 6-speeds ahead and I was real proud of it, except it was a little smaller than the Case tractor that we normally
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