Are you sure they gave you a 1099-R ? That reports retirement income so a 1099-R would not be used to reimburse you for a down payment. Can you clarify that?
When you say your father put you on the Deed, HOW he did that will make a big difference on how you handle the sale.
If he made you half owner, your basis will be half the value when you were added to the deed and half the fair market value on his date of passing. (you would have inherited half)
That value is what you would use to compute Capital Gains.
If HOWEVER he used a "Life Estate" and you were named "Remainderman" the sale would be treated as a sale of an inherited home (You inherited the entire property) and you would get the "Stepped-up" basis of Fair Market Value on date of passing, which usually results in no reportable gain if the sale is immediately after the date of passing. (and perhaps a small loss for closing costs)
Real estate laws are governed by the state, not the IRS, so you should speak with a local real estate attorney if you are unsure of the terms of your ownership.
Any additional details about the 1099-R would be helpful.
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