"We saw the property as a rental and took depreciation."
Did you apportion all of your deductions (including depreciation) based on the square footage of the rented (not shared) space? Did you rent the rooms at FMV? Did you deduct only the portion of expenses that you actually paid?
As @Mike9241 pointed out, these are some of the issues that might come up in an audit.
Capital gain in cases of joint ownership is normally apportioned according to each person's ownership share.
I agree with @Mike9241 that you might do well to seek the services of a tax professional.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
