@kritter-k
There's one other consideration that I forgot to mention. If you sell soon after the spouse's death, the selling price might be not much more than the value on the date of death. With a broker's commission and possibly other selling expenses, you might actually have a small loss rather than a gain. But you cannot claim a loss on property that was for personal use. (Having relatives living in one of the houses is personal use.) You might still have to report the sales, but for the sale of your personal home or a second home the net loss shown on your tax return will be adjusted to zero. That means, of course, that there is no tax, and the exclusion of gain does not apply.
