In both cases, your basis is the FMV on the date your mother died. If you don't live there as your main home, you pay the same capital gains tax either way, on the difference between the FMV on the date of her death and the selling price. Under scenario 2, you report 2 different sales, with the 4 year gain in one sale and 1 year gain in the second sale -- is there a reason to think the market will go up so fast that you want to hang on to the house a little longer?
