Hi:
My Mom passed away in January 8,2011.I inherited the house and then sold it for $125,000.Do I have to pay capital gains taxes on this?
Thanks,
Louis

Depends. When you inherited the property your cost basis in the property is set to the fair market value as of the date of death. The executor of the estate should have provided you with a figure for the market value. If you don't have that number you will need to get an appraisal done.

Now that you've sold the property you have a capital gain only if the proceeds from the sale are greater than that cost basis. If the proceeds are less than the cost basis then you have a loss, but unfortunately you cannot losses on the sale of personal property. In any event, report the sale on schedule D. If there's a gain you report the amount of the gain there, and if there's a loss show the net as $0.