My Son will inherit our paid off home in the future. He will live in the house with his family for 5 years or more and at some point he may decide to sell it. Would the sale be treated as a regular capital gains?

No. When he inherits the house, that is his basis cost, the value on that day. If he lives in the house 2 of the next 5 years, can deduct $500,000 of the gain and will be taxed on gain OVER that amount.

What ma0641 says is correct, provided your son is MARRIED when he sells the house.

And a formal appraisal needs to be done at time of inheritance.

Formal appraisal is probably not a bad idea, but normally a comparative value analysis from a real estate agency is considered adequate to determine FMV,

What ma0641 says is correct, provided your son is MARRIED when he sells the house.

I noticed it said "with his family" so that's why I said $500K not 250. Thanks for insight.

So he did, making your $500K assumption valid.

Here in CT, we were told we had to have a formal appraisal.
(CT is famous for horrible probate laws.)

Noted with interest!

While that's true about CT, I may be wrong about probate requiring a formal appraisal. My mother's half was in a trust. Might have been the bank.

While that's true about CT, I may be wrong about probate requiring a formal appraisal. My mother's half was in a trust. Might have been the bank.
When my mom died, I was executor. Sold the house (NJ), gave my sister half of proceeds, filed Income Taxes for mom ( NJ follows Federal exclusion) and the buyer has fair market value. No appraisal except buy buyers mortgage company. Some states are known inheritance tax pits.