realize that if sold at a gain before they die, you'll pay tax on deprecition recapture and won't be eligible for the home sale exclusion. since you own it, even if sold after their death there will be no step-up in basis. I don't know if this will work because it depends on their finances but here's a suggestion. they buy the house in their name (you are not on the title) if necessary you lend them any money needed to close the deal. you co-sign on the mortgage, if need, but your parents pay it. in addition, they would need to pay you interest on the money you lent them to close the deal. this assumes there finances are good enough to pay the mortgage, upkeep on the property - such as taxes, maintenance utilities, insurance, etc. and pay you at least a reasonable amount of interest on your loan (if they can afford it they could also pay you, principal). if this is practical the advantages are if they live in it at least 2 years then sell they would be entitled to exclude gain up to $500,000. if they live in it til they die and you are the sole heir you get a step-up in basis and if sold shortly after death of the last of them, you would have no taxable gain - maybe even a loss due to selling expenses.
