My wife's sister wants to gift my wife her share of a property they're joint tenant together. What are the tax implications?

Your wife's sister will have to file a gift tax return for her ownership interest in the property.  However, she probably won't owe a gift tax. Your wife will have a transferred basis in the property, equal to what her sister's basis was in the property. There is no reassessment of the property for property tax purposes on the transfer by a bona fide gift.