you are partial owners of the house so the sale would be taxable to you as a long-term capital gain. since you don't live there no home sale exclusion is available to you. if you want you could gift your ownership to your daughter and son-in-law. likely gift tax returns would need to be filed but it's unlikely you would pay any gift tax. this way you avoid the capital gain tax on the sale. your relatives get your tax basis. when they sell their gain is the sales price less the sales expenses and less their tax basis + yours. if they meet the exclusion rules, currently up to $500,000 of the gain is not taxed. other options are possible and should be discussed with a tax pro.
