I can tell you right now, selling it to you for $1 is a surefire way to get audited. There's this thing called something like "implied value" (or something of that nature) that will bite the seller big time in an audit. It will also hurt the buyer even more, because if your cost basis is $1, then when you sell the property every single penny is taxable income to you as the seller. So I highly recommend you throw this option out the window *yesterday* if not sooner.
"My mom wants to give me the money after paying the mortgage."
;If she gives you more than $14K in any one tax year (and from the figures you provided, she will) then she will need to file a gift tax return. If she puts your name on the deed, you are automatically "gifted" half the value of the house, which would also be more than $14K. So that's a bad move too since it creates unnecessary paperwork - even though it won't cause her to have to pay any taxes. What it does is get the amount she gives you subtracted from the 5.2M tax free inheritance that gets passed to her heirs when she passes.
I would suggest you get with a tax attorney in your local jurisdiction to look at and learn all your options, and the pros and cons of each.
What I would do in your situation, is purchase the house from her for what she owes on the mortgage. Then I would live in the house for at least two years before selling it. That's a win-win situation then, regardless of what the market does. If when you sell the house (and lets say you only sell it for $400,000) it it's been your primary residence for at least 2 years, then you pay no capital gains taxes on the gain up to a maximum of $250,000 if single, or $500,000 if married and both you and your wife buy it together and live in it together as your primary residence for two years.
So by purchasing it for $240,000 and living in it for two years, if you sell it for $400,000 that gives you a $160,000 gain that would be tax free. If the market improves (and it probably will) and you sell it for $500,000 that gives you a $260,000 gain that you would only pay taxes on $10,000 of it if single, or none if it if married and you and the spouse buy it together.
On the other side of that coin, if your mom just keeps the house and wills it to you in her Last Will & Testament, then when she passes you inherit the house tax free *AND* (this is a biggie) you also inherit whatever the FMV of the house is at the time of her passing. So when she passes if it's worth $400,000 and that's what you sell it for, you pay no taxes on $400,000. Now imagine if the house was worth $1M (one million dollars) at the time of her passing, and you sold it for that amount or less? Yep! It's tax free!
Talk to a tax professional on this, as I'm sure they can educate you on more options in your local jurisdiction than I can possibly imagine.
