Assuming that you and your sister did not live in the house for at least two out of the five years prior to selling it, you will both likely have a tax liability from the sale of the house. This is because the deed was transferred to you before your mother passed and would be considered a gift, rather than inheritance.
Since you owned it for around 9 years, it will qualify for the preferential capital gains tax rates. The amount of gain that will be taxable will be determined by subtracting the adjusted basis from the sales price.
Yours and your sisters adjusted basis would be your your mothers original cost of the home, plus any improvements (not including normal repairs and maintenance, plus certain closing costs.)
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