Deductions & credits

You may wish to consult a CPA or tax professional, because your situation is a bit complicated.

When a life estate property is sold while the life tenant is still living, there is no "step-up" in the cost basis.  The capital gain is the net sale proceeds less the property's adjusted cost basis - which is the original purchase price plus any capital improvements made after purchase, such as a room addition.  (If the property had been held until after the life tenant's death, the cost basis would have been "stepped up" to its fair market value at the time of her passing.)

In your situation, your share of the capital gain as the "remainderman" is determined by IRS actuarial tables.   IRS tables determine the respective ownership interest in the property for purposes of calculating taxes, depending on the age of the Life Tenant at the time that the property is sold.  For example, if under IRS tables the Life Tenant (your Mom) is considered a fifty percent (50%) owner, then her fifty percent (50%) portion of the profit upon sale would be exempt from capital gains tax up to the $250,000.00 limit - because she lived in the property as her primary residence for at least 2 of the 5 years prior to the date of sale. However, the Remainder Owner’s fifty percent (50%) share of the profits does NOT qualify for the capital gains exclusion and would be subject to capital gains tax at applicable tax rates.  You are the "remainder owner."