The mechanics of how it's calculated are too complex to explain.

You need to have a kitchen, bath and mechanicals to make a place to live full time.

All mechanicals are new within 5 years.

See them ahead of time by doing 1 above, and develop an alternative finance mechanism or strategy.4. 

What questions should I ask, in addition to when the roof and mechanics of the house were installed?

Ideally I'd like to keep this property in the family, so I'm trying to think of some creative financing strategy that would allow me to buy it from them through seller financing or some other mechanism and allow them to retire with their house equity.Does anyone have any creative strategies to help them that I am not thinking about?

I agree with what everyone has said.What I would also say is to make sure all your mechanical systems are well maintained.

An inspector will look at the property and reveal any issues they see with mechanicals, roof, structure, plumbing, electrical, etc.

@Randell Harris30 years age difference is not a comp unless the older home has had everything brought up to the same standards (plumbing, electrical, roof, mechanicals).  

We did a complete overhaul on this property with all new mechanicals and cosmetics throughout.