I live in Michigan and I have a 'second' home which I inherited from my Mom in 2009. It was in a living trust and I was the executor of the estate and the home was left to my adult son who, then, signed it over to me because he could not manage it. I have rented it over these last several years and, now, think that it is best to sell it and invest the money, differently. At the time of my Mom's passing, the value of the home was at it's lowest due to the timing; also, she still owed over $40,000 on the home which I paid off because I was concerned that if something happened to me that my son would not be able to pay it off and, thus, loose the home and it's value. I am wondering about any taxation that I would experience given the fact that the home was inherited in this manner. The value of the home at the time of death was about $220,000 (?) but with about $45,000 owing on the mortgage. Currently, it is worth about $370,000, free and clear - I am guessing. What would be the best way to deal with selling this home and investing that money and avoid heavy taxation? I have a primary home in Michigan which has a mortgage which I am currently paying on.