One way to pass a house to the next generation is to sell the property to your child in exchange for a note. Then you can forgive some of the note each year, using the annual gift tax exclusion to avoid or reduce gift tax.
For example, if your son owes you $25,000 this year, as part of the deal, you and your spouse could forgive $22,000, which would be covered by the gift tax exclusion, dropping your son’s obligation to $3,000.
The sale must be arms-length, meaning that the purchase price is fair, and there cannot be a pre-arranged plan for the debt forgiveness. Such a strategy removes any future property appreciation from your taxable estate and only one initial appraisal is needed. However, your son would be expected to pay interest on the note at an acceptable rate every year while you forgive the principal.