Gift of Equity

My grandmother wishes to sell me her home for $150,000. The home appraises for $210,000. I am wanting to get a loan of $170,000. $150,000 to purchase the home and the remaining $20,000 for renovations. My grandmother has offerred to do a gift of equity for me. My question is what is the best way to handle this situation so that my grandmother does not have to pay any taxes and what is the limit for gift of equity to me? I thought it was $12,000 per year but wasn't sure. She would be giving me a gift of equity of $40,000. Is this possible to do without my grandmother paying taxes? If not, what are my other options for obtaining a loan to purchase this home?

Thanks
Mandy