My sister and I were put on deed of mom's house in 2022 and inherited mom's portion after mom passed in 2025, how do I calculate taxable income on the sale of the house?

[M-MTax · Accepted solution]

You might be able to use the FMV on the date of death (i.e, step-up basis) if you can show your mother retained a life estate (this would be an implied life estate).

See https://www.law.cornell.edu/cfr/text/26/20.2036-1

An implied life estate (which is the result you want) is dependent upon the circumstances of the transfer and the grantor of the deed.

[bbschulz77]

Yes, I can definitely prove that mom retained an implied life estate in the house as she lived there alone and payed all expenses until her death.   I am looking for clarity on how to determine my "cost basis" in the house to determine any potential taxable capital gain income at time of sale.   Is my cost basis totally based on the FMV at the time of mom's death or do I need to use 1/3 of the value when it was transferred to me and my sibling in 2022 plus the 1/3 of the value inherited at her death?   

[M-MTax]

If you're considered to be a remainderman (i.e., your Mom had a life estate) then the basis for the house is the FMV on the date of your mom's passing. The date it was transferred to you is not relevant for that purpose.