Assuming the home was sold prior to the death of the life tenant:
If the life tenant lived in the home (or owned the home and lived in a licensed nursing facility) for 2 of the 5 years leading up to the date of sale, he/she is entitled to the capital gains exclusion on their share of the gain. If the exclusion amount exceeds the amount of their capital gain, the sale need not be reported on their tax return, unless he/she received a 1099-S. If the sale must be reported by the life tenant, they would enter their proportional information in the Less Common Income > Sale of Home section of TT.
If the home was sold prior to the life tenant's passing, the cost basis of the home is its original (adjusted) basis. There is no "step-up" in basis.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
