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If your Grandmother transferred part or all ownership to you prior to her passing (as gift) then you would need to report the sell.
Your cost (BASIS) will be the same as your Grandmother's (her cost plus improvements). You will pay tax on the difference in the basis and the sell amount (less costs to sell).
It doe snot have to be reinvested in real estate and by doing that you will not receive any tax benefit. The gain will still be taxable to you.
You can spend the money any way you wish but please know that the tax will be calculated on your return for the year of sale.
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