Parents can gift a home to their child, but they may be subject to estate and gift tax. If the home is worth less than $30,000 (each person is allowed a $15,000 gift exemption) or if the parents have not made gifts exceeding $22.8 million over their lifetime, the tax would be waived. However, the child may be subject to future capital gains if they don't live in the home for at least two years before selling. This is because the IRS calculates the cost basis as the amount the parents paid for the property.