You mom may have put the home in your names, but who is the legal owner on the deed? If it is the 5 of you, then you would have capital gains if you sold the house. The good thing is that capital gains are taxed at a maximum rate of 15%, and 5% if the person would be in the 10 or 15% bracket without the gain (for 2008 the 5% tax will be replaced by a 0% tax for those in the 10 or 15% bracket). The capital gain would be the difference between what the house was sold for, and what it was bought for by your mom, plus all the improvements over the years. Also, if the house was originally owned by your mom & dad, and your dad passed away while still owning his half (or all of the house), there would be what's called a "step-up in basis" for his half or 100% (if he was the sole owner prior to his death). The step-up would be what the house was worth on the date of his death rather than what the house was bought for plus improvements. Any improvements done to the house after his death would be added to the basis of the house to determine the cost basis. If the house is still legally owned by your mother, then as long as she had lived in the house for 2 out of the last 5 years, the house could be sold, and any capital gains up to $250,000 would not be taxed. Don't know your mom's exact situation with the house, but those the various possibilities. Best bet is to talk to a tax attorney, or local CPA in your area about what is best.
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