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Sorry to tell you but that usually isn't the right thing to do. Was she trying to avoid probate or something? She gave you a gift. You don't report it now. But when you sell you need to use her cost basis and don't get a step up to the market value if you had inherited it. So yes you will owe capital gains tax on the selling price minus her cost. So you need to find out her cost plus any improvements. Unless you live in it as your primary house for 2 years before you sell.
Oh, if the value was over 15,000 she might have to file a separate Gift Tax return but there won't be any tax on it.
"If I wanted to sell it, how do I avoid capital gains tax."
You won't be able to avoid capital gains tax, but as VolvoGirl alluded to, you may qualify for a capital gains exclusion of $250,000 ($500,000 on a joint return) if you live in the house as your primary residence for at least 2 of the 5 years leading up to the date of sale.
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