If they give it to you as a 'gift' you may owe taxes on it. Uncle Sam hates to be left out. If you are worried speak with your Realtor or tax advisor for advice. I wish you luck on this purchase.
My husband went on permanent disability last year and we just applied for and received a substantial exemption of part of the value of our home from property taxes. If you will be living in the home as your primary residence, you can claim a homestead exemption. Your parents probably have this exemption. You'd have to apply for it when you assume control of the property.
If your parents are over 65 or one parent is disabled, they may have additional exemptions on the property which would lower the taxes. Unless you meet those qualifying standards, the property would no longer be eligible for those exemptions and your taxes will be higher.
The disability exemption will make a significant difference in our annual taxes. They will be about 1/3 less than they had been previously.
Check out the local county appraisal district where the property is located to see what the taxes and the exemption status are.
If your parents' home is listed with a Realtor, then he likely priced it competitively within the current market. There are not likely any additional tax concerns to discuss simply because they are your parents. It is a standard transaction at market price, and the fact that you are related should just be a side note.
Do you have to pay taxes? Yes. Do they? Yes. Beyond that, it shouldn't be anything out of the ordinary.
That is to say, if it is sold at $700,000, the bank will think it is $700,000, at least within 6 months after the house closed. that is to say, if you want to get an equity line out of the house, you may not be able to...
Then, of course, the basher realtors will come in to bash houses around the area down from $1.5m to $700,000, quoting your house transaction ... after 2 more houes sold at that price, the professional appraizers will appraised your house $700,000, or similar house in neighborhood ...
So, now you see how bash realtors can bash down all the value of a community ...
What is the difference between the sales prices and the FMV? If it is less than 11k, then the amount above 11k is a gift.
Again, I am not a tax professional. I would recommend looking up "gift tax" online for more information.
In general, US Parents want to pay less tax because magazine like Forbes kept teaching US parents to escape tax (maybe that's why we have huge budget deficit?). Your parent can pass lots of their asset, in the form of their house to you, the child, without paying estate tax later, nor gift tax. And, the tip, according to Forbes is to "sell it as cheap as possible" from parents to child.
Say, your parents own the house at $200,000 30 years ago and now worth $1.5m, they can sell you much cheaper, say, at $700,000 so that they can walk out $500,000 profit no tax, and pass to you, the child $800,000 implicitly. Otherwise, you father can only give you $12,000 and mother gives you another $12,000 gift each year without paying IRS gift tax.
Now, you see why Harvard Professor said the wealthy people in the US got richer... they don't pay much tax as they are supposed to because lots of laws were made by their senators to benefit them ...