Since your sister's estate had $703 in interest income, you do have to file a Form 1041 Fiduciary Income Tax Return for the estate. Estates with taxable income over $600 is required to file. You may also have to file a fiduciary tax return with the state where your sister and you reside as well.
As to the sale of the condo, since you have changed the title to your name, when you sell the condo, you will have to report the sale on your 1040. The cost basis is the appraised value of the condo as of her date of death, plus all your remodeling costs. You may also be able to include the maintenance costs since her death as part of the cost basis. The sale will most likely produce a long-term capital loss.
