"his mother left a house to him and his sister" - we need to clarify if the house was gifted or inherited.
Did your family or your husband's sister use the house as a primary residence?
If the property will be sold - your husband and his sister will have capital gain or loss which is calculated as $600,000(selling price) - (adjusted basis)
As the property was inherited - beneficiaries have stepped up basis - which is a fair market value of the property at the time his mother died. That is very important to determine that value.
The basis should be adjusted by any improvement expenses after that.
As the property was owned more than a year - the gain will be taxed at reduced tax rate - not more than 15%. NJ state tax will be additional.
If because of economic condition - the value of the house went down and there is a loss - the loss on the rental property may be deducted.
Please let me know if you need any help in reporting or estimating your tax liability.
Tax Preparer
Taxes, Immigration, Labor Relations
If at the time the property was inherited - the fair market value was $600,000 - that value should be used as a basis for the property - and now you will sell for $520,000 - you do not have any taxable gain, but you have a loss.
You may not adjust the basis with repair and maintenance expenses - only improvement expenses should be added.
As the property was used as a rental - repair and maintenance expenses should be deducted against your rental income.
The loss on a personal property is not deductible, but the loss for rental property is deductible on your tax return.
Please let me know if you need any help with reporting.
Please feel free to ask for clarification as long as you need.
Based on the information you provided - you will not have any capital gain - because th selling price will likely be less than your basis - and will not owe any capital gain taxes.
Unfortunately - according to JustAnswer rules - I may not contact customers outside this site and may not establish a professional-client relationship.
You might need to find a local tax prepare.
I would be glad to verify your calculations and help you with other tax issues.