No, there is no problem with selling at at a loss. But as you pointed out, the lower selling price may affect your parent's Basis. But assuming they live and own the home for at least 2 years, if they sell it they are usually exempt from the first $500,000 of gain anyways.
A few clarifications about the Gift Tax:
- The annual exemption amount is now $15,000 per gift.;
- Yes, IF both you and your spouse own the property AND it is gifted to both of your parents, you may be able to avoid a Gift Tax return. If only one of you is on the title or you only sell it to one parent, then it may depend on state laws.
- Gift Tax is assessed to the giver, not the receiver.
- Even if you go over the $15,000 annual amount, you won't actually owe Gift Tax unless your total Lifetime gifts are over $11,000,000+. But you would need to file the return if you are over the $15,000 limit.
