How does transfer of property from parent to child affect us- taxes, credit, etc?

You have to pay a gift tax on any thing over $10k annually not $1M. They can put the house in your name for $1.00 so you would not have to pay anything. I would recommend them putting it into a revocable Living Trust instead. That is nice that they want to put it into your name but what if there is a fire? What if they are not able to the taxes? You would be responsible. If the house is left to you in a trust you will have to pay inheritance tax if you are over $1M (it might be less now) BUT you would not have to put it into probate and that will save you a lot of money. Plus the house goes just to you not your spouse as long as you keep it separate. Plus you control the house. You could sell it or mortgage it and that would not be good for them. Not that you would but your husband could.

you have a gift tax for anything higher than $1M. It is best to check with a tax professional on this, however, because any mistake could mean you lose the property, and your credit goes even lower. You may have to pay state taxes, again though, check with a tax professional because you may be able to deduct that amount from income taxes. It varies by state.

It's done all the time but usually with the assistance of a CPA and an attorney. You asked alot of questions so instead of giving you all my opinion since opinions are like lawyers (everyone has one) I won't give you mine instead I'll give you the links you need to get the answers.

IRS: Selling your Home Publication: http://www.irs.gov/publications/p523/index.html and http://www.irs.gov/publications/p523/ar02.html

IRS: Home Sale Exclusion rules, publication: http://www.irs.gov/newsroom/article/0,,id=105042,0...

IRS: Estate and Gift Taxes:

http://www.irs.gov/businesses/small/article/0,,id=...

IRS: Tax information when buying a home: http://www.irs.gov/publications/p530/ix01.html

IRS: Deductible costs when purchasing real property:

http://www.irs.gov/publications/p551/ar02.html#d0e...

IRS: 3.6 Itemized Deductions/Standard Deductions: 6. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses): http://www.irs.gov/faqs/faq3-6.html

When all else fails you might want to go to the one that governs on these issues:

IRS: Contacting your local IRS office: http://www.irs.gov/localcontacts/index.html

Buena Suerte

the recipient will have to pay a gift tax. Speak to a tax attorney instead of getting the info from a bunch of schlubs like us.

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Buy the property for $10.00. Its not a gift if purchased.