Mrs. Litt has also recently inherited a house on West Terrace and its contents from her late aunt, the property was acquired in 1990 for $1.2m and has a current market value of $3.5m.

 Her aunt was living in the property at the date of her death and they have been leasing the property out to tenants for a monthly rent of $1,100, following her death.

They are unsure whether they want to continue to lease the property, sell it or move into it themselves and want to know what the tax consequences might be on the inheritance and each of these options?