Are there capital gains taxes? Does this get added to total income?
Whenever you inherit property in the U.S., the property's value for capital gains purposes is "stepped up" to the value at the date of death. For example, your relative bought a house 40 years ago for $25,000. At the date of their death, suppose it is valued at $250,000. That will be your "basis" in the house. If you sell it for $260,000 after fees, then you will owe taxes on $10,000. The $10,000 should be treated as long-term capital gains.
You need to know the date you inherited the house and its dollar value at that time. If you kept it over a year then any gain would be long term which is 5% in 2007. Example; you inherited a house over one year ago that was worth 100,000; you sold it for 120,000; thereby giving you a long term gain of 20,000 that has to be included on a sch D with your tax return. The 20,000 would only be taxed at 5% this year.
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