1) What is legal monetary gift maximum per year per person that is legally tax free?

2) What do we need to do to gift my child with the property that she currently lives in now but which is on my husbands and my name -- without paying any gift taxes? What forms we need to fill out, etc?

The federal gift tax exclusion for 2009 is $13,000.

You should consult a tax attorney or accountant to help with the 2nd part. There are variables that come into play such as what state you are in, the value of the house, the value of your estate, are you in position to spread the gift out over several years, is she married, etc.

The best way for Part #2 is to set up a mortgage on the house, record the payments up to $26,000, then give it back to her ($13K for you and $13K for your wife).

For part #2 may be it is better that you do not gift them but put it in your will.
For an inherited property the cost basis is the fair market value at the date of inheritance.