Your capital gain will be $500,000, and it is a long-term gain. The gain is the amount you sell the house for, $700,000, minus your basis, which is the fair market value on the date that your mother passed, $200,000. How much tax you will have to pay on that $500,000 gain depends on your filing status, your other income, and many other factors. It also depends on what you did with the house between your mother's passing and when you sell it. Did you rent out the house? If you have been living in the house within the 5 years preceding the sale you might be able to reduce the amount of taxable gain considerably.
