@rjs wrote:
Don't forget that she can add to her basis the cost of any improvements that they added to the house. Selling expenses, such as a broker's commission will be subtracted from her gain.
It may be worth mentioning that, because of the step-up, your mother can only adjust her basis by half the cost of improvements. For example, suppose they remodeled the kitchen in 2010 for $50,000. Mother's basis becomes $150,000+$25,000 = $75,000, and the father's basis is the same. When her spouse died, your mother received the full step up of $400,000 on his half, which "absorbs" the improvements. Her final basis would be $575,000 in this example, showing how she add half the cost of any improvements to her basis, not the entire cost (for improvements made before 3/1/23, of course. She gets a full adjustment for improvements made after 3/1/23.)
