Grandmas House in Mountain View CA Quitclaim Deed then Refi?

[Eidref Laxa]

We are entertaining the idea of purchasing my fiancee's grandmother's home in Mountain View, CA. This house is in a PRIME location, walking distance to google. COMPS are going for 1.2-1.4 mil ARV. We want to present the best proposition to both parties, she is our grandmother of course.

Currently:

-The Mountain View house is being rented to family.

-We are renting a room from her in the San Jose home she lives in. Her Mountain View home is being rented by family, but we would switch places upon taking ownership.

-The Mountain View house is paid off.

-There is a mortgage on the San Jose house.

Her Wants:

-Keep the property within the family rather than sell it, but would ultimately sell it if her kids don't want to purchase the house (let's assume none can purchase).

-Avoid capital gains taxes as much as possible.

Our Wants:

-House hack- either renting rooms, renting the house, AirBnB, Build an ADU - The more privacy the better

-Find a price that works. We are thinking in the range of 600-700k. Her capital gains would literally be over 200k in taxes should she sell it on the market other wise.

-Build equity to leverage for future investments

Are there any legal ramifications if she Quitclaim/Quickclaim Deeds us into the property, and we cash out Refi money and essentially use that to buy her out? Are there Pros and Cons to this and is there a better way to do this?