Level 9

Investors & landlords

Not if you sell/gift it for $0.

Why are you concerned about that?  When your relative eventually sells it, they will be receiving about $400,000.  So having them pay the $12,000-ish in taxes shouldn't be a big deal.  If you really want to, you can give them some cash for $12,000-ish when it is sold.

Let's take a step back a second:  Is there a mortgage on this home?  If so, that will significantly complicate this transaction.  If there is a mortgage, what will be done with it once the relative receives the home?

As Tom said, there can be a lot of things to consider for a transaction like this, so a tax professional would be a good idea BEFORE you do any transferring of ownership.   For example, what is the purpose of this Gift?