@cashmir316 - why did your mother-in-law deed the home to her daughter? what was the objective to doing that?
Had that not occured, your mother-in-law could have sold the home and taken advantage of the capital gains exclusion (assiming she lived in and owed the home for 2 of the past 5 years).
On your current home, you have to 'run the numbers" and decide how long you'd continue to own the home. Remember, you presumably have lived in the home 2 of the last 5 years and can get the exemption from the 1st $250,000 of capital gains, but once you rent and more than 3 years goes by, you can no longer qualify for the exemption (without going back and living in that same home for up to 2 years).
