You need a CPA in NJ to answer this.
Although the Fed rules are standard on inheritance and capital gains....the state tax laws can be very different.

I know for a fact that Pa and NJ are very different.

House C: If this is an investment property, would you consider doing a 1031 tax free exchange with your portion of the proceeds - investing all or some of it in another investment property and deferring capital gains? You'd have 180 days from the time of the sale to close on another property. (You must 'park' the proceeds in an escrow account in the interim -- not take possession of them.)

Chisue's suggestion is a good one. I work for a 1031 qualified intermediary in California. You can do an exchange with your 30.5% and it doesn't matter whether or not the other owners of the property do an exchange. But it will mean that you will still own another property, or part of another property (tenants in common) if you exchange. And although you will have 180 days to close, you must identify potential replacement property within 45 days of the sale. And remember, it must be investment property (i.e., a dwelling that you will rent out, or say, a portion of a shopping center, restaurant, etc.). If it is a single family dwelling, the IRS regs state that you cannot live in it for at least two years. Some of our clients choose this way to purchase retirement homes. It's not for everyone, but it is something to think about.

I'm not an accountant, but it will make a difference if either house is your "primary residence".

Yes, I know that. House A is our primary residence--that's essential so we can get the tax deduction when we sell that.

C isn't an investment property--so I don't know if that advice would work for us. It's a little complicated. Our 18% share is because we refused to take money from MIL's assets when we had huge legal fees when other relatives were stealing from her. We were legally entitled to be repaid for bringing the matter to the court's attention, but as the outlaws had already stolen a quarter of a mil from her, we weren't comfortable taking even a penny of the little she had left for her end care (she had Alzheimer's). The lawyers (ours, MIL's financial guardian, and the out-laws' lawyer) and came up with the solution that they'd put a percentage of the house in our name which we'd get after she died. She did (outlaws never even told us, so we missed the funeral, but that's another post, GRRR). So, long story short--I'm not exactly sure how you would classify that bit of property--we've owned it on paper for a few years, but haven't had use of it, nor income--but we also haven't had any expenses for it's upkeep, either. So it's all a little complicated. Only thing I know, is that we really couldn't afford the money we put out at the time--but we felt we couldn't afford NOT to either, and now my sweet MIL is at peace, and we will finally recoup what we spent to protect her from a bunch of folks who professed to love her with their mouths, while they were shoving their hands into her pockets.

But I do appreciate the suggestion and will bring it up when I get to sit down with my accountant. I was sort of thinking that I might want to invest in some sort of property eventually, once we've liquidated all this extra real estate we've found ourselves holding at the moment.

It doesn't matter if property C is investment property or not. You could still exchange. And you could combine the funds from the sale of your portion of property C with funds from the sale of property A or B (i.e., sell two properties) and purchase only one other property (property D). You would then pay taxes on only funds over and above the purchase price of property D.