Sorry for your loss. your tax basis is the Fair Market Value on the date of the date of her death.
If the value of the home declines after the date of death, or if a loss is generated due to selling costs, case law (Miller, T.C. Memo. 1967-44, and Watkins, T.C. Memo. 1973-167) supports possible deductibility of the loss since the home is a capital asset held by the estate.
