Yes, you pay capital gains, but you get a stepped up basis on the initial cost.
If you didn't own the home until she died, you each get 1/3 of the fair market value (FMV) at the time of her death. You can use county tax records to determine this amount.
If you all went on the title before her death, you will average the FMV from the date in which you were added to the title and the FMW at her death.
