No, she won't be taxed on the entire amount if she meets the requirements below.
She won't pay taxes on the first $250,000 (also known as a gain) she makes from the sale of her home. If she's Married Filing Jointly, she won't pay taxes on the first $500,000.
That income is free and clear as long as:
- She owned the home
- It was her main home for two years or more within the five years leading up to the sale.
If the sales proceeds were less than $250,000 ($500,000), you don't have to worry about a basis if she meets the requirements above.
- Otherwise, check with her county or treasurer. They may have records as to the value of the property when it was built (occupancy permit) and any improvements that permits were applied for.
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