Yes. The rule that you could postpone the capital gains by buying a new home was eliminated in 1997. The current rule is that if you sell a home that you lived in as your main home for at least 2 of the 5 years prior to the sale, you can exclude $250,000 of capital gains from your income (or $500,000 if married filing jointly) and you pay capital gains on anything above the exclusion. Since you did not live in the home as your main home, the entire gain is taxable to you.
Note that your gain is the difference between your cost basis and the selling price. Your cost basis starts out as the fair market value on the date the previous owner died. You may need to document this through a real estate professional. You can increase your cost basis and reduce your selling price by certain adjustments listed in publication 523, documenting as many adjustments as you can will help reduce the taxable gain.
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