Hal_Al
Level 15

Deductions & credits

You probably need legal help. 

I'm not a lawyer, but my understanding of "life estate" is that the cost basis steps up to the fair market value (FMV) on the date of death* of the person with the life estate (your grandmother) , even though you may have acquired  the title (or partial title) to the property earlier by gift or inheritance.

However,  "my grandmother  passed away just a few years ago", indicates that there may have been some increase in value, that could result in a capital.  But it will be a long term capital gain (all inheritances are long term, regardless of the time you actually owned it.).  But, if you "have no job right now", the first  $39,000 of long term capital gains are taxed at 0%**, the rest at 15%. So, there will  actually be little or no tax on the sale.

 

*References: 

http://www.njelderlawestateplanning.com/2010/02/articles/estate-and-inheritance-tax/life-estates-est... 

http://www.law.cornell.edu/cfr/text/26/20.2036-1

 

**Depending on your other income and dependent status