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Hello and thanks you for using Just Answer. A taxpayer can give $12,000 (for 2008, $13,000 for 2009) to any number of recipients in a calendar year without paying federal estate and gift tax. Gifts that qualify for this annual exclusion are never taxed-no gift tax is owed when the gift is made, and the gift is not taxed at death.
If you mother used the home as a principal residence for at least two out of the five years prior to the sale she can exclude up to $250,000 of gain from the sale of the residence.