Not an inheritance if he's not in the line of succession or named in the will.....sounds more like a gift from the step siblings who would need to file a gift tax return. You all should get help from a tax pro.
Yes this is an inheritance if the home was put in your husband's name after death based on the will if applicable.
You can report the sale of this inherited home as inherited property as long as your husband did not live in this home and use it as his main residence. The cost basis for your husband will be the fair market value (FMV) on the date of death multiplied by his percentage of ownership. Selling price is usually a clear indication of FMV if close to date of death. Inherited property is always considered held long term, which also provides the tax advantage of capital gain treatment.
In its simplest terms, FMV is the price that an asset would sell for on the open market.
Capital gain treatment means the tax is limited, regardless if your regular tax rate might be higher.
- Click this link for details on entering this sale: How do I enter a sale of inherited property?
I agree with @martinmarks1919 -- It is a gift from the siblings if it passed on death to them and then they gave a share to the husband.
If this is the case then the cost basis for your husband would be the same cost basis as it was in the hands of the siblings for his prorated share.
[Edited: 04/01/2021 | 8:59a PST]
NO it is NOT an inheritance unless it passed from the decedent via will or intestacy to the husband @DianeW777. It is a gift from the siblings if it passed on death to them and then they gave a share to the husband.