What would be the best way to transfer real estate (100% owned and paid for; no mortgage or debts) by a non-US citizen and non US resident to his child that is US citizen and living in the US from a tax perspective?
There are three options:
Non-resident sells to the resident - no complications there, as long as it is an arms-length transaction (i.e.: market price). Recipient has his own basis (same as stepped up basis in #3).
Non-resident gifts to the resident (or sells at a discount, which is a gift) - then a gift tax is in order. There's the $14K exemption, but no lifetime exemption, so essentially gift tax will be paid. Recipient keeps the basis.
Non-resident leaves as inheritance to the resident on death - there's $65K exclusion (IIRC, numbers change each year) and estate taxes will be paid. Recipient gets a stepped-up basis.
More details here (amounts are a bit outdated in the article).
Ignoring other considerations, investing in having your foreigner parent become US resident may save you quite a lot in taxes.